Liberal Leadership Change Seems Positive As Australian Shares Lift On Scott Morrison Pm Victory
August 24th, 2018
AUSTRALIAN shares have lifted after Scott Morrison won a party room vote to become Australia's new prime minister.
Mr Morrison won a three-way battle for the leadership of the Liberal party on Friday, with incumbent Malcolm Turnbull not contesting the party ballot.
The benchmark S&P/ASX200 jumped as the outcome of the vote was confirmed at about 12.50pm AEST, reversing a fall in morning trading to be up 15.4 points, or 0.25 per cent, to 6,259.8 points at 1340 AEST.
With two hours of trading left the market is poised to break a three-day losing streak.
The Aussie dollar moved sharply higher to 72.85 US cents when the former treasurer's victory was confirmed.
It had been trading between 72.39 and 72.506 US cent ahead of the Liberal party room vote.
Investors sold the Aussie down over the past two days as uncertainty over Australia's political leadership cast doubt on future policy direction.
Ahead of the vote, Rakuten Securities Australia chief operating officer Nick Twidale said a victory in the Liberal party room vote for Peter Dutton as new PM would "most probably result in further downside for the Aussie dollar in the short term".
"He represents a move to the party's right and what many see as a more likely loss at the next general election," Mr Twidale said in a statement.
"If the one of the more moderate alternatives in Scott Morrison or Julia Bishop take over then we'll likely see a bit of a relief rally back towards 0.7300 for the beleaguered currency, which saw its biggest loss in a year yesterday."
On the ASX the market was supported by the Australian healthcare sector, which hit a record high in early trade with CSL rising 1.9 per cent, while Mayne Pharma Group hit its highest in nearly 1-1/2-years.
"Any of these companies with strong offshore earnings clearly benefit from the softening Australian dollar. The momentum is all for the downside," said James McGlew, executive director of corporate stockbroking at Argonaut.
Financial stocks, the country's largest sector, were flat.
Two of the "big four" banks traded in the red, with the second biggest lender, Westpac, the biggest drag, down more than 2 per cent after it reported lower net interest margins for the third quarter amid higher funding costs.
Commodity markets were lower as the US-China trade dispute escalated after the world's two largest economies implemented punitive 25 per cent tariffs on $US16 billion worth of each other's goods.
The county's mining index fell 0.3 per cent on weak commodity prices amid global trade worries.
Miner Rio Tinto was off 0.4 per cent while Newcrest Mining fell over 3 per cent.
Copper, Shanghai rebar steel futures and gold fell on Thursday as the US-China trade dispute weighed along-with a strengthened dollar on expectations of hike in US interest rates soon.
In local companies news, Brambles was up 6.1 per cent to $10.565 after announcing it will spin off its IFCO containers business and posting a four-fold increase in full-year profit to $1.37 billion.
Medibank Private was down 2.1 per cent to $3.105 after its full-year profit was down one per cent to $445.1 million and the insurer said the outlook for the private health insurance market is flat.