Australian share market dives on uncertain federal election results

The local share market has closed sharply lower with only utility stocks rising, as investors remain spooked by the uncertain election outcome.

The ASX 200 index lost 1 per cent to finish on 5,228, while the All Ordinaries Index fell by 1 per cent or 52 points to finish on 5,313.

Consumer stocks fared the worst amid ongoing uncertainty about the federal election result, while some disappointing data showing retail sales were weaker than expected in May also dampened sentiment.

The Bureau of Statistics figures showed sales rose by a seasonally adjusted 0.2 per cent in the month, and economists said that was driven in part by weak inflation.

Among consumer stocks, retailer Harvey Norman lost 3.9 per cent to $4.39, and grocery retailers were also sold, with Metcash dropping 4.8 per cent to $1.91.

The hotel group Mantra fared the worst in the sector, down 7.7 per cent to $3.14 after an investment bank cut its rating on the stock.

Financial stocks fared little better — the big four banks all retreated. NAB had the biggest losses, down 1.6 per cent to $24.68.

The banks are facing the prospect of a royal commission pending the outcome of the election — Labor, the Greens and many independents are all backing such a move.

RBA leaves interest rates on hold

The Reserve Bank has left interest rates on hold, but has opened the door to a future rate cut once it has more news on inflation.

The RBA left the cash rate at the historic low of 1.75 per cent, and Governor Glenn Stevens noted the recent volatility on financial markets after the Brexit vote.

But he said while it was prudent to keep rates steady this month, the board would refine its assessment of the outlook for growth and inflation, and adjust rates if appropriate.

The dollar rose on the RBA's announcement, but quickly settled as traders assessed the likelihood of a possible rate cut next month.

A short time ago it was buying 75 US cents, 67.4 euro cents, 76.4 Japanese yen and 56.9 British pence.

In commodities, oil prices were down with Brent crude dumping 1 per cent to $US49.60 a barrel.

Spot gold was also easing after hitting a two-year high and was buying around $US1,345 an ounce.

Source: ABC News

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