Australian Assets May Rally After Election Result, Analysts Say

Matthew BurgessMay 4, 2025 at 12:02 PM HST

Anthony Albanese at the Labor Party election night event in Sydney, Australia, on May 3.

Photographer: Brent Lewin/Bloomberg

Australia’s shares and currency may post a relief rally on expectations of policy continuity under Prime Minister Anthony Albanese after hisre-electionfor a second term.

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Local defense stocks in particular may benefit thanks to the ruling Labor Party’s support for the sector. The Australian dollar could get a further boost after it recouped losses since President Donald Trump announced reciprocal tariffs in early April and shifted the focus on a possible improvement in US-China trade ties.

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“We anticipate Australian yields to rise across the curve, but more so at the long end given Labor’s resounding victory reinforces bigger government and larger deficits are here to stay.”

“While tariff developments are likely to cap yield backups at the short end, the last thing the RBA would want to do is derail inflation expectations and ease too quickly when weak productivity and rising government spend could add to inflation risks. We don’t expect the RBA to ease as aggressively as the market has priced in, and at the margin, the election outcome supports our view.”