With the Australian elections happening this weekend, you might be wondering: “Will this shake up my investments?” Whether you’re just getting started or already have a few ETFs and stocks on your radar, let’s break down what this election could mean for your portfolio-no jargon, just the stuff you need to know.
Key Takeaways
- Labor is the hot favourite to win, but a hung parliament is possible.
- No major tax or investment changes are on the cards from either side.
- RBA rate cut expected May 20 after inflation dropped below 3%.
- Energy and housing policies could shift which sectors do well.
- Markets usually bounce back quickly after elections, no matter who wins.
The Election at a Glance
- When? This weekend!
- Who’s likely to win? Labor (odds: 1.05 vs Coalition’s 10.25).
- Biggest risk: A hung parliament, which could mean more negotiation and uncertainty.
Why Should You Care?
If you’re a next-gen investor who’s investing in ETFs, stocks, or even just thinking about it, elections can sound intimidating. The good news? Australian elections rarely cause big, lasting market shocks-especially when both major parties are playing it safe on investor policies.
Quick Take: What’s Happening with the Economy?
- Inflation: Just dropped below 3% for the first time in ages.
- Interest rates: RBA is tipped to cut rates on May 20.
- What this means: Cheaper borrowing, which often gives the stock market a boost, especially for growth companies
What’s the ASX doing right now?
The S&P/ASX200 is up today, gaining 18.80 points or 0.23% to 8,145.00 and setting a new 20-day high. The top performing stocks in this index are HMC CAPITAL LIMITED and DIGICO INFRASTRUCTURE REIT, up 9.05% and 7.81% respectively.
Over the last five days, the index has gained 2.22%, but is virtually unchanged over the last year to date.
Digging Deeper: How the Election and Economy Interact
Let’s zoom in for a moment: Why do things like elections, inflation, and interest rates matter so much for your investments?
First up, inflation. When inflation is high, your money doesn’t stretch as far at the shops, and the Reserve Bank of Australia (RBA) tends to hike interest rates to cool things down. That makes loans (like mortgages) more expensive and can put the brakes on the stock market, especially for companies that rely on borrowing money to grow. But now, with inflation dropping below 3%, the RBA has room to cut rates. Lower rates mean it’s cheaper for businesses to borrow, which can boost profits and, in turn, share prices.
Now, the election. This year, neither Labor nor the Coalition is proposing big changes to how your investments are taxed or regulated. That’s a relief for most investors! But, there are some differences in their policies, especially around energy and housing. Labor is backing renewables, while the Coalition is talking up nuclear power. Both want to tackle housing affordability, but with different approaches. If you’re investing in ETFs or stocks tied to energy or property, these policy tweaks could nudge certain sectors up or down.
Finally, the “hung parliament” wildcard. If no party gets a clear majority, it could take longer for big decisions to get made. Markets don’t love uncertainty, so you might see a bit of wobble in the short term. But remember: markets have a habit of bouncing back once things settle down.
Bottom line: The combination of a likely rate cut, steady hands on tax policy, and only mild policy differences means most young investors can breathe easy. Stay focused on your long-term goals, keep your portfolio diversified, and don’t let election headlines spook you!
