Shares surge past two percent; dollar drops

On the first day of trading following the election, Australian shares gained 2.2 percent, showing that investors were unfazed by the new Rudd government. The surge added almost $34 billion to the value of the domestic share market, and was fuelled by a number of factors including a rumour that a new Chinese stakeholder in Rio Tinto would defend against BHP Billiton’s bid for the smaller commodities company.

This is despite a drop in the Australian dollar on the world market, which closed at 87.32 US cents, a drop of one US cent. Factors that may have influenced the drop include the post-Thanksgiving sales in the US, leading into Christmas shopping.