Asian markets are flat to marginally higher as investors digest another disappointing housing report out of the US and the ramifications of a change in leadership in Australia for the fate of Resource Super Profits Tax (RSPT). Despite Japanese exporters slumping on the weak US housing data, the Nikkei 225 is 0.8% higher while the Kospi is seeing gains of 0.6%. The Hang Seng and Shanghai Composite are firmer by 0.1% and 0.4% respectively.

In Australia, the ASX 200 fell away late, closing the session 0.1% lower at 4479.7, having earlier traded as higher as 4519. The materials sector was the big talking point after new Prime Minister Julia Gillard announced her intentions to adopt a more flexible and consultative approach with the miners over the highly contentious RSPT. After having been higher earlier in the session, the energy and financial sectors finished in negative territory.

Clearly the dominant story of the day was the election of Julia Gillard as Australia's first female Prime Minister. While this represented a ground breaking day for the country the market's focus was most definitely centred on what implications the leadership change might mean for the RSPT.

Undoubtedly the general feeling is that Gillard will adopt a more flexible and consultative approach with the miners and she went to great lengths to reiterate this point in her acceptance speech.

Of late many market observers have been lamenting the lack of spark in the market. With flat US leads, another dull day had been in the offing so today's political distractions were more than welcome. The political manoeuvring has also breathed some life into the dull standoff we've witnessed in recent weeks between the miners and the Rudd government.

Many brokers have suggested current mining stock valuations were attractive, even with the RSPT in its current form. Now that it looks more likely to be watered down under the new PM, this could easily be the catalyst for a significant re-rating of the sector. We could even see the return of some offshore investments.

Turning our attention to the market and it was the financial sector which did most of the damage late in the session. The sector closed 1.2% lower, with Macquarie Group dropping 4.7% on big volume. At a UBS Investment Conference the group made a presentation, saying market conditions are increasingly uncertain and adversely impacting some business activity. The bank also said it was too early to evaluate the implications for the fiscal 2011 results.

The market certainly didn't like the wording, with the big four banks all finishing in the red. They were down 0.2% and 2%, with Westpac the worst.

Elsewhere, ANZ was upgraded to 'buy' from 'hold' by Deutsche Bank on the back of expected growth from its Asian expansion strategy. The broker said that whilst it accepts that there are some headwinds for the banking sector and ANZ over the coming 6 - 12 months, longer term it believes ANZ's Asian strategy will deliver above peer EPS growth while reducing ANZ's reliance on wholesale funding. Deutsche estimates ANZ could transfer up to $60 billion of overseas deposits back to fund Australian growth by 2014, which could generate up to $1 billion of additional annual earnings. Its target price was raised to $26 from $25.

The industrial sector saw some selling too, finishing the day down 0.5%. Macquarie Airports, Brambles, Transurban and CSR were the major decliners, all down between 1.1% and 4.4%, with Macquarie Airports the worst.

The energy sector as a whole fell 0.3%, with the likes of Woodside Petroleum (-0.2%), WorleyParsons (-0.7%) and Caltex (-4.5%) the biggest detractors. On the upside, the coal stocks had a very good day following the change in prime minister. Macarthur, Centennial and Whitehaven Coal were all up between 2.2% and 6.4%, with Macarthur topping the list.

Still in the coal space and Riversdale Mining jumped 7.7% after it reported that China's Wuhan Iron and Steel Corp had agreed to take a 40% stake in its Mozambique coal project for US$800 million, valuing the project at US$2 billion. Wuhan will also take 8% stake in Riversdale at A$10.00 a share, costing around A$200 million. Memorandum of understanding is non-binding, though, so deal is no certainty, but it suggests there's a strong chance Riversdale will be able to finance the project, with US$200 million to be paid after signing of definitive agreements, US$150 million on completion of a feasibility study and US$450 million on granting of relevant licenses and regulatory approvals.

On the upside, it was the material sector which added the most points. It closed 1.1% firmer after new Prime Minister Julia Gillard said she will adopt a more flexible and consultative approach with the miners on the proposed RSPT. Fortescue Metals was the biggest riser, up 2.5% while Rio Tinto, Amcor, BHP, Lihir Gold and Newcrest Mining all rallied between 0.8% and 1.7%.

Ben Potter Research Analyst

IG Markets - CFD trading