Here's why the CBA share price jumped 5.5% today

It's a post election share market party.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price surged 5.5% to $76.87 this morning as investors pile into the stock on the back of the Coalition's shock federal election win over the weekend.

The result means Labor's plan to scrap franking credit cash refunds to eligible shareholders has been most likely permanently smacked-down as political suicide to mean the franking credit paying blue-chip favourites of SMSF investors and retirees are soaring across the board today.

Other blue-chip banks like Australia & New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) are up between 6% to 7.5% today and doing the heavy lifting to send the wider S&P/ ASX200 (ASX: XJO) index to a post-GFC high.

Banks are receiving extra attention as commentators or analysts commonly believe that the Coalition win will also support residential property markets due to the canning of Labor's proposals to reform negative gearing tax breaks for property investors.

Moreover, currency markets are now betting heavily on the RBA cutting benchmark lending rates by 0.25% this June in another fillip for Australia's sagging residential property markets.

Outlook

I am often asked should you buy bank shares and if so which is the best? In my opinion the better quality of CBA's loan book, return on equity, and technological edge over its competitors means it's the best option for anyone interested in bank shares despite its marginally higher valuation.

Quality rules in the share market over the long term and you just have to compare CBA's track record for shareholders compared to its competitors to understand this.

Therefore a stock like CBA might not be a bad option for a retiree after income in today's low rates world, but it's not going to offer the kind of handsome capital growth that tomorrow's blue chips could offer…

Both the businesses named in the report below I am personally familiar with and in my opinion they're definitely two of the strongest candidates on the local market for huge gains in the 5 years ahead….

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. You can find Tom on Twitter @tommyr345 The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »

Three businesspeople leap high with the CBD in the background.
Share Market News

Boom! ASX 200 blasts to new record highs

ASX 200 investors just sent the benchmark index into uncharted territory.

Read more »