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Australian market reacts calmly to election

08-24-2010 09:19 BJT

Stocks of Australian mining companies rose on hopes the election outcome will result in a proposed mining tax, being either scrapped or diluted. Saturday's vote has failed to result in a clear winner, potentially delivering the nation's first hung parliament in 70 years.

The Australian stock market opened lower on Monday morning, given the uncertain political condition.

But the down trend didn't continue. The benchmark index closed little changed, despite what will likely to be the country's first hung parliament in 70 years.

Saturday's election failed to result in a clear winner, giving hope to the country's mining giants that a proposed resources tax would either be diluted or scrapped altogether.

Shares of mining giants like Rio Tinto and BHP Billiton performed strongly, and led the whole market to rise.

John Noonan, Chief Int'l Financial Review Sydney Bureau said "Remarkably calmly, we have had the stock market open up in Australia slightly in positive territory and that's led by the miners which make up the so much of the Australian stock market. They are actually doing better in the day because they believe remarkably is that the mining tax will be scrapped, that is considered to be a plus, I think the local markets are fairly sanguine about the fact that there is a hung parliament and there will be a government form and there will certainty returning and nobody wants to sell at the moment."

Both the Australian dollar and government bonds fell in value. The Australian dollar lost almost 1 percent against the US dollar in early trading, but slightly clawed back as buyers pushed up the price.

Investors are seeing the prospects of the country's first hung parliament in 70 years as just a blip in its long-standing political stability. Analysts noted trading was subdued and said the currency's bounce was in part a result of some short-covering activity.

Editor:Xiong Qu |Source: CNTV.CN

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