Will the US election affect my super or shares?

With the US election campaign well and truly underway, many people are wondering how the event will impact superannuation and the share market both overseas and in Australia.

According to Alex Jamieson, Australia's leading financial advisor and founder of AJ Financial Planning, the US election may significantly impact share prices both in the US and internationally, including Australia.

"The question many people want to know is, how will the US election impact my superannuation and shares. Given the US election happens every four years we can see from historical data how the activity tends to impact markets before, during and after the election," Jamieson said.

Pre-election uncertainty

"Historically, markets tend to experience increased volatility before the US elections due to uncertainty about the future administration's policies and their potential economic impact," Jamieson said.

"The general uncertainty often leads to cautious behaviour among investors, resulting in a dip in share prices and superannuation (super) markets as they await more clarity. Often this is seen as a buying opportunity for investment houses, super funds and general investors."

Post-election certainty

"Once the election results are known, markets typically stabilise and may even rise due to the newfound certainty regarding future economic policies," Jamieson said.

"The anticipation of fulfilled election promises, such as economic stimulus measures, can boost investor confidence and lead to market gains. The Biden administration was seen as anti-crypto, so given Trump is running on a pro crypto platform, this is seen by many as positive for Bitcoin and other crypto tokens."

Pre-election investment opportunities

"The weeks leading up to the election often present buying opportunities due to heightened volatility and lower share prices. Investors who can tolerate short-term volatility may benefit from investing during this period, potentially capitalising on the market's post-election rebound," Jamieson said.

Global Interconnectedness

"Australian share markets are closely linked to global markets, including the US. Significant political events in the US can have a ripple effect on Australian shares due to economic ties and investor sentiment," Jamieson said.

Sector-specific impacts

"Certain sectors, such as resources, technology and financials, might be more affected by US policy changes, given their global exposure and trade relationships," Jamieson said.

How to respond

"Investors need to assess their risk tolerance when considering pre-election investments, as market movements can be unpredictable. Maintaining a diversified portfolio can help mitigate risks associated with political uncertainty. While short-term market movements are influenced by elections, maintaining a long-term investment perspective is crucial for sustained growth," Jamieson said.

Jamieson emphasised that by understanding these dynamics, investors can make more informed decisions about timing their investments around US elections and managing their portfolios to benefit from potential market movements.

About Alex Jamieson Financial Planning

Alex Jamieson is the founder of Melbourne-based advisory firm, AJ Financial Planning. With a firm belief in responsible investing, Alex crafts investment portfolios for clients that not only meet their financial objectives, but are also sustainable and match their ethical values.

A highly respected financial advisor, Alex is considered one of the country's leading experts on all matters financial planning, investing and retirement.

http://www.ajfp.com.au/