Stocks close in the black

The local market has recovered from early post-polling nerves to rise above its pre-Brexit level.

The Australian sharemarket recovered from a nervous start to close higher despite the weekend’s inconclusive federal election, boosted by the prospect of economic stimulus in Europe after the UK Brexit vote.

At 1615 AEST on Monday, the benchmark S&P/ASX 200 index was up 35.2 points, or 0.67 per cent, at 5,281.8 points, while the broader All Ordinaries index was up 38.2 points, or 0.72 per cent, at 5,365.2 points.

The September share price index futures contract was up 44 points at 5,247 points, with 23,946 contracts traded.

Following on from last week’s 2.6 per cent rise, the index now sits slightly above where it was trading immediately before Britain’s vote to leave the European Union more than a week ago, which unsettled world markets.

The mining-heavy materials sector led the day with a gain of 2.6 per cent and the basket of energy stocks added 1.4 per cent. The major banks held the market back, together knocking 9.5 points off the ASX 200.

Diversified global miners BHP Billiton and Rio Tinto advanced 2.3 per cent and 3.7 per cent, respectively, and iron-ore producer Fortescue Metals Group added 7.2 per cent to its highest close since September 2014. Gold miner Newcrest Mining climbed 4.8 per cent.

Among oil and gas stocks, Woodside Petroleum rose 0.6 per cent, Oil Search was 1 per cent higher and Santos was 2.6 per cent stronger.

As counting of Federal election votes continued, the prospect of political instability has raised concerns about the country’s ability to maintain fiscal discipline and ultimately to hang on to its AAA credit rating.

That uncertainty and the risk of a potentially costly Royal Commission targeting the financial industry if the left-leaning Labor Party forms the next government weighed on bank stocks.

Westpac led the big banks lower, falling 1 per cent. National Australia Bank and Australia & New Zealand Banking lost 0.8 per cent and Commonwealth Bank of Australia eased 0.6 per cent.

Dow Jones newswires, with AAP