On Tuesday November 3, 2020, the United States of America will vote to elect its new president. Standing for re-election will (of course) be the Republican candidate and incumbent President Donald J. Trump. His Democratic opponent has yet to be decided.
Although this election is thousands of miles away from Australia and the ASX, most of us will still be watching with interest (and perhaps trepidation).
But it’s also my opinion that this election will dictate the fortunes of the ASX over the course of this year.
I suspect Donald Trump doesn’t have too much interest in the fortunes of the ASX – although I assume he hopes we all WIN and WIN BIG.
But what he does care about is the performance of his own economy and the US stock market.
Trump’s presidency has been remarkably pro-business and pro-markets. He frequently cites the record highs the US markets have been making as achievements of his administration.
The deep tax cuts for corporations that he passed in 2017 put a rocket under the stock market and his ‘Phase One Deal’ with China on trade last year did the same.
I’m sure Trump doesn’t want the economy or stock market to tank in an election year and will do whatever is in his power to stop this from happening. And he does have a lot of power. He’s proven before that a simple tweet can influence markets, and I’m sure Twitter isn’t the only weapon in his arsenal.
There’s the ‘plunge protection team’ (otherwise known as the Working Group on Financial Markets) for one – which I won’t go into, but it’s worth looking up!
All this is good news for ASX investors, in my view. As the saying goes: ‘if America sneezes, the world catches a cold’. But I think the opposite is also true to some degree. If the US markets have another ripper year of gains, the chances of the ASX following suit are good.
Now, no one can predict what the stock market will do in the future, and I’m certainly not pretending to be exempt from this rule. But I think it’s definitely a factor to weigh up if you’re waiting on the sidelines in cash for a crash.
We may be eleven years into one of the longest bull-runs in history. But if the President of the United States wants it to keep going until at least 2021, I wouldn’t be betting big on a 2020 crash.
The post Here’s why the US elections are good for the ASX appeared first on Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020