Miners boosted by political uncertainty

Althought traders have been treading carefully in light of the non-outcome, the Australian markets have not suffered greatly as a result, with mining stocks being a clear winner so far.

At noon, BHP were up 31 cents at $38.21, rival Rio Tinto shot up 79 cents at $72.37, while Iron ore specialist Fortescue metals, rose six cents at $4.70.

RBS Morgan's private client adviser, Craig Walker believes the absence of a clear winner in Australia's federal election on Saturday has buoyed investors hopes of a proposed resources rent tax being scrapped.

"The larger resource stocks seem to have reacted fairly positively to the election result or lack thereof on the weekend," he said.

"BHP is up fairly strong, and Rio is not doing too badly either.

"Obviously the election result is hanging in the balance at the moment and we will have to wait and see what happens with that."

Mr Walker said investors would remain cautious until there were more reports of a federal government being formed. "People want to see the outcome of the election," he said.

Aussie dollar falls one cent

The uncertainty surrounding the outcome of Saturday's federal election has not had the expected impact on the Australian markets with the all ordinaries up four points at lunch.

Traders were likely to be more nervous than usual going into the final full week of the company earnings reporting season.

The Australian dollar's fell by one US cent in early morning trade, however the market seems to have remained more resilient than some expected.

ANZ and the NAB say the uncertain political landscape is the worst possible outcome for financial markets with a final election result days if not weeks away.

A hung parliament poses a risk to the economy and will dampen consumer confidence, business groups say.

With counting set to go on for days, Labor and the coalition are in a deadlock for lower house seats and the balance of power looks likely to rest with the three independents Tony Windsor, Rob Oakeshott and Bob Katter.

The Australian National Retailers Association believes continuing political uncertainty will be bad for its members and the economy.

"Continued political instability will have a negative impact on the sector as consumers stay away from the shops," chief executive Margo Osmond said.

"Election campaigns traditionally generate a brake on spending and the lack of a clear outcome will extend that effect beyond polling day.

"Stability and government with the capacity to get on with the job will be critical if we are to see growth in spending and the flow-on positives for the national economy."

'Hung parliaments not always bad for business'

Business Council of Australia president Graham Bradley was more positive, saying hung parliaments are not always bad for business.

"There's no reason why we couldn't have a successful period ahead with a minority government," he told ABC TV.

"There are precedents both in the Australian states and overseas for very successful minority governments to lead countries through continued reform.

"So I don't think it necessarily means we'll be in for a period of paralysis when it comes to the important reforms that we need."

Australian Chamber of Commerce and Industry chief executive Peter Anderson called on businesses and consumers to carry on as normal despite the uncertain political landscape.

"A caretaker period in national politics does not put the economy on hold," he said.

"Australians need not see the tightness of political combat as anything but an expression of a working democracy.

"Neither the business community nor the public should put economic or investment decisions on hold during this period."

Commonwealth Securities senior analyst Craig James said Australia's economic strength would not be jeopardised by the election outcome, with many key factors remaining stable no matter which party won government.

"We still will have, in our view, a credible economic manager, whether it's Labor or Liberal," he said.