Chart of the week: Election stock market performance

By Anthony Doyle, Global Cross Asset Investment Specialist

Anecdotes suggest that uncertainty around an Australian Federal election can result in households and businesses delaying important spending decisions. When it comes to the Australian equity market, returns in the run-up to election day have been relatively stable. For example, since 1980 there have been 14 Federal elections. Interestingly, in the 50 days leading up to each election, equity market returns have generally moved between a narrow +/- 10% band. However, in the 100 days that followed each election result, the Australian Stock Exchange All Ordinaries Index has posted very different return outcomes. If we look at 1983, the equity market was up 31% following the election of the Hawke Labor government. In contrast, in 1987 the Australian equity market posted a -31% loss following the election of the Hawke Labor government, a period that encompassed Black Monday and the 1987 global equity market crash.

Based on the last 14 Australian Federal elections, there is no clear winner regarding which political party is better for equity markets. Given the global nature of financial markets, international developments will likely be the bigger driver of returns for the Australian market in the short term.

 

Download the chart

 

 

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

Investments in overseas markets can be affected by currency exchange and this may affect the value of your investment. Investments in small and emerging markets can be more volatile than investments in developed markets.

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information.  You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. This document may include general commentary on market activity, sector trends or other broad-based economic or political conditions that should not be taken as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be taken as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise. 

© 2019 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

Share:
 
 

Want more insights like this?

Get our free, monthly e-newsletter bringing you valuable insights, opinion and education.

Subscribe