Sept 25 (Reuters) - New Zealand shares rose on Monday after a strong showing by the business-friendly National Party in weekend elections, though the absence of an outright majority for any one party lent an air of uncertainty ahead of the formation of the next government.
While the ruling National Party won the largest number votes in the general election, neither of the major parties secured enough seats to have a majority in parliament, forcing them to rely on the nationalist New Zealand First Party to form a coalition.
“There is uncertainty at the moment because we obviously haven’t formed a government straight out of the election, but it was a relatively predictable result that perhaps the market had considered,” said James Smalley, senior investment adviser at Hamilton Hindin Greene.
“The way the election has turned out, status quo is likely to remain, and that’s why we’re seeing the market taking a very relaxed sort of reaction on trading today.”
The benchmark S&P/NZX 50 index rose 0.7 percent, or 54.99 points to 7,869.77 by 0416 GMT, with consumer staple and material stocks leading the gains.
The uncertainty around the make-up of the new government weighed on the New Zealand dollar, with the currency down 0.45 percent at $0.7306 midmorning, after falling as low as $0.7290.
“The currency has been volatile. Foreign investors may be reacting to polls that came out before the election, but until the uncertainty is removed, we might be little bit in a state of limbo,” said Smalley.
Dairy firm a2 Milk Company Ltd was the biggest gainer on the main index, rising 3.5 percent to its highest level in nearly two weeks.
Fonterra added as much as 1.6 percent, after the company reported an 11 percent fall in full-year profit on Monday but gave an upbeat outlook for the coming year.
Skycity Entertainment Group Ltd climbed up as much as 3.3 percent, posting its biggest intraday percentage gain in six months, while Fletcher Building Ltd 2.7 percent.
Australian shares inched up slightly, with energy stocks gaining the most, as oil prices extended their gains.
The S&P/ASX 200 index rose 0.03 percent, or 1.463 points to 5,683.7. The benchmark closed 0.5 percent on Friday.
The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day since the start of 2017, helping lift oil prices by about 15 percent in the past three months.
Australia’s energy index gained as much as 0.8 percent, with Woodside Petroleum Ltd hitting more than a three-week high and Caltex Australia rising as much as 2.2 percent.
Materials stocks were largely weak, with Fortescue Metals Group down 0.9 percent. (Reporting By Christina Martin in Bengaluru; Editing by Shri Navaratnam)