The economy is a dominant issue in the Election. From now until polling day, Independent Australia will outline some key facts on the economy that put the kybosh on many of the myths, lies and distortions being peddled in this Election campaign.
This is the 14th in a series of short articles by leading economist Stephen Koukoulas, which will be published daily up until the Federal Election on Saturday 3 May 2025.
FACT 14: ARE INVESTORS KEEN TO SEE A LABOR WIN ON 3 MAY?
As the polls and betting markets confirm a high probability of a Labor win at the 3 May Election, there are some important trends unfolding in the markets for stocks, bonds and the Australian dollar.
It is a well-established fact that when making asset allocation decisions, investors react to and take account of news, risks and opportunities.
Observe the recent turmoil in the U.S. on the back of the Trump tariff roller coaster and the market volatility.
Investors price the markets for stocks, bonds and currencies for each country based on a series of factors — domestic economic growth, monetary and fiscal policy settings, the outlook for government debt and, importantly, political risk.
The prospect of a dysfunctional government in any country or jurisdiction would see investors flee, forcing stock prices lower, government bond yields higher and the currency lower.
In recent weeks, as the prospects have risen for the return of the Albanese Labor Government, the ASX has risen solidly, government bond yields have fallen and the Australian dollar has risen.
Indeed, the ASX200 has risen 9 per cent from the early April low, ten year government bond yields have fallen to a six month low and the Australian dollar has risen to regain U.S. 64 cents from levels around U.S. 59 cents less than a month ago when, perhaps coincidently, the Coalition was ahead in the polls.
Invest in the facts!
Other facts in this series:
- In fact, Labor has inflation back under control
- Energy prices are plummeting
- Wage growth on the rise under Labor
- Labor brought down government debt by billions
- Labor building on a better future
- Coalition taxing at a record high, not Labor
- Under Labor, Australia is more productive
- Australia among best in the world at beating inflation
- Australia keeping tax down
- Employment rising under Labor
- Interest rates expected to drop under Labor
- Housing affordability on the mend
- Superannuation hits high under Labor
Stephen Koukoulas is one of Australia’s most respected economists, a past chief economist of Citibank and senior economic advisor to an Australian Prime Minister. You can follow Stephen on Twitter/X @TheKouk.
