The impact of the federal election on the share market is expected to be minimal.
The Australian share market is likely to experience only a slight rise in volatility in the weeks following the election, according to the S&P/ASX 200 VIX (A-VIX), a tool to monitor the level of near-term volatility in the Australian benchmark equity index.
This also indicates that the market predicts that a share market rally is unlikely.
The level of the A-VIX implies market expectations of volatility in the S&P/ASX 200 over the next 30 days and provides an indicator of investor sentiment. The A-VIX is currently at 15.628, which is approximately mid-way between the year’s high of 21.675 and low of 10.540. However, the A-VIX has increased from around 13 to 15.628 over the past two weeks.
Brian Goodman, ASX Product Development Manager said: “Although we have seen the A-VIX rise slightly over the past two weeks it is only nearing the mid-point of the year’s range and so is not at a level considered relatively high. The A-VIX could be interpreted to indicate that investors are not expecting market volatility to increase significantly over the next 30 days, despite Saturday’s election and current international events.”