Barclays research has highlighted the possibility that neither of the two main parties will be able to secure the 76 seats needed to form a government, leading to a hung parliament and subsequent market risk.
Opinion polls since last year had shown a lead for Labour, with the latest Roy Morgan poll showing 54.5% of respondents backing a Labor government, on a preferential two-party basis.
The research indicated this election could have a similar outcome to 2010, when a minority Labor government sought support from the Greens and independents.
“There is a strong surge of independent candidates in several seats this time, mostly held by Liberals, hoping to benefit from discontent with the government,” the report said.
He said a risk to markets this year would emerge from a hung parliament or a minority government formed with the support of the Greens or independents.
“A suspended parliament could prevent laws from being passed or force the government to pass less market-friendly laws, especially if Green support is needed to form the government.
“For example, the Labor government of Prime Minister Julia Gillard, with the backing of the Greens, introduced a carbon tax in 2012. Labour, after bringing leadership back to Kevin Rudd, changed its policy on the deeply unpopular carbon tax in the run-up to the 2013 election, which was won by the Coalition.
The report also said there was little difference in the political programs of the two parties in terms of economic impact.
“For the current election, there is little distance between the two major parties on employment, child care, care for the elderly. Although there are differences in terms of certain taxes, calendar net-zero carbon emissions, key aspects are similar Fewer policy differences suggest less economic and market impact.