Crisis? Hardly. Financial markets shrugged off talk of "mayhem" and "turmoil" to trade roughly as normal Monday, in same cases a little better.
The Australian dollar closed higher than on Friday, more than regaining the one US cent it lost in thin overseas trading before domestic trade opened. At 89.2 US cents late yesterday it was buying more than at any point on election eve.
"The speculators who sold early were probably squeezed a little bit during the course of the day," said Royal Bank of Scotland foreign exchange strategist Greg Gibbs.
"Basically it comes down to that there's no burning macroeconomic issue that needs addressing. The economy's underlying strength remains in place."
The share market closed almost unchanged in defiance of a slump on Wall Street with mining shares gaining as Telsra lost value.
"It's a squall in an Australian thimble," said economic analyst Sean Keane, from the Asia-Pacific consultancy Triple T.
"While it is absolutely correct that markets dislike uncertainty... they will quickly move past this. Whatever the form of the ultimate coalition it is unlikely to do anything significant to affect the overall positive story that is unfolding in Australia."
Long-range projections released by the Australian forecaster BIS Shrapnel this morning have Australia's economic growth rate accelerating to a high of 4.3 per cent before easing back to 3 per cent over the next five years and the unemployment rate dipping to a low of 3.9 per cent before climbing back to 4.6 per cent.
Senior economist Rachel Logie said the election outcome should make no difference whatsoever to the projections. Even abandoning the mining tax would make little difference, as mining investment would be constrained in any event.
"Miners can't get labour, miners can't get machinery," she told The Age. "Employment in construction is already as high as it was before the crisis. Oil and gas and iron ore miners are in competition with each other for that labour. That's the big constraint, not whether or not there is a tax."
BIS Shrapnel is predicting a series of interest rate hikes, taking the Reserve Bank cash rate from 4.5 to a peak of 6.5 per cent over the three years. It expects the standard variable mortgage rate to climb to 9.1 per cent.
Long-term bond rates edged up early Monday but most of the increase was reversed as buyers returned throughout the day.
"There are legions of bond hunters around the world looking for that rare mixture of a strong government issuing at a high yield," said Mr Keane. "Those who own Aussie bonds have been well paid to do so, and they know it's likely the currency will climb higher."
Funds Manager Christopher Joye of Rismark International said the injection of three independents into Australia's political decision-making should be a plus for foreign investors.
"It's much like the addition of independent directors to a public company's board that is controlled by insiders," he said. "We will likely see an emphasis on better governance and transparency as flagged by the independents. This should bring more rigour to the business of government with the cost being slower decision-making speed and arguably more bureaucracy."
Published in today's SMH and Age
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