The centre-left Socialist Party (PS) won 77 seats, down sharply from its absolute majority of 120 in the previous legislature, after the resignation of Socialist Prime Minister Antonio Costa amid a corruption investigation.
Failure to approve a budget usually means the government's collapse and a new election.
Portugal's constitution sets out that a new general election cannot happen earlier than six months after a new legislature first convenes, nor in the six months before a presidential election, which is due in January 2026.
AD'S POLICY PROPOSALSThe newly-formed AD is led by the centre-right Social Democratic Party (PSD) - the Socialists' main traditional rival.
Investors do not expect much divergence from established fiscal prudence and economic growth from an AD government.
Persons:
Andrei Khalip LISBON, Antonio Costa, Marcelo Rebelo de Sousa, Luis Montenegro, Andre Ventura, Rebelo de Sousa, Chega, Ventura, Sergio Goncalves, Aislinn Laing, Mark Heinrich
Organizations:
Democratic Alliance, Liberal Initiative, Socialist Party, Socialist, Conservative, Social Democratic Party, PSD, Socialists, Investors
Locations:
Montenegro, Portugal, Brussels