US presidential election: what’s good for Australia’s economy?

Financial markets are hoping for a Hillary Clinton victory in the US presidential election, but is this really what's good for Australia's economy?

1836 0

Americans are heading to vote in the US presidential election, some like never before and some armed with placards – the result could be ugly but at least it will be entertaining.

Australians meanwhile are watching on like its Cup Day as many business leaders hope that it will improve global growth opportunities at a time when the world is still struggling to get out of the hole left by the financial crisis.

Financial markets are hopeful of a Hillary Clinton victory and US stocks soared higher overnight after the FBI said her handling of emails wasn’t a crime. The Aussie dollar has also moved higher.

The mum’s among us probably are also hopeful for a result that leads to a better free world for our children. I know I do, but there’s no stock market to gauge that feeling.

But the result will be tight and despite all that’s been made of it, it’s not just about the woman’s vote, look at Europe, New Zealand or even here – female leadership has been done before – it’s about the health of the globe, money and opportunities.

To test how I’d vote I took that fancy online News Corp survey and the result surprised me.

It showed that I didn’t mind some of Trump’s policies, and didn’t mind some of Clinton’s but voting isn’t about fence sitting, least not today.

The result showed I’d probably vote for Hillary Clinton and if that happens financial markets are expected to like it, at least for a bit, and so too might the Aussie dollar at least better than a Donald Trump outcome.

Why do we think this?

Well according to Olivia Engel who makes a healthy living picking winners in Australian and global stocks, markets are favouring a Clinton victory because it will be better for global growth, while a Trump win will create uncertainty for the future, at least in the short-term.

“Some people are saying surely not,” she says when talking about the possibility of a Trump win.

“Markets would be surprised and react negatively, but would somehow muddle through. They may have learnt to be braced for unexpected outcomes after Brexit – Britain’s vote to leave the European Union.

“A Trump win would however be bad for emerging markets and bad for US health care and infrastructure stocks, or any companies which benefit from fiscal spending.

“If Hillary Clinton gets voted in financial markets will breathe a sigh of relief, there will probably be a bit of support for the market to rally in the short-term, but I doubt it will have a long-term impact.”

St George Bank senior economist Janu Chan says a Clinton win would be the better option for the Australian and world economy based on their proposed policies.

“We would expect the Australian dollar to fall if Trump wins and Aussie dollar to lift if Clinton wins.

“The main reason is that risk aversion will most likely lift and that tends to be negative for the Aussie dollar.”

There’s also a sense that if the result is tight, both Clinton and Trump will have their hands tied to make changes, and could even be headed towards policies that are less supportive of free trade as they try to improve jobs for US citizens.

“If Trump was elected, then it could have a negative impact on future company investment.

“The problem with world economic growth is companies aren’t investing for the future. If that is prolonged under a Trump administration and companies don’t want to invest in a country who’s trade walls are going up, that could prolong the period where companies aren’t investing or growing.

“Australian economic growth is impacted by that as well, so it can affect companies in Australia.”

So it’s not going to be a battle that’s over in a day – it will linger, and the fight for key issues such as improving global growth and opportunities for women will continue – although let’s hope that the latter becomes that little bit easier.

Subscribe to Financy®

Get your Financy fortnightly fix with Financy Rewards, content and more. Plus each quarter you'll receive the latest Financy Women's Index, helping you keep pace with women's financial progress.

In this article