How does the US elections affect ASX 200 shares?

The US elections are now over, how is it going to affect ASX 200 shares? Well, the market has responded fairly positively with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) up 0.54% so far.

The Democrats in the house have won the House of Representatives, however the Republicans continue to hold the Senate.

Some investors may feel that it’s good news that the Democrats now have some control over the administration and its agenda.

President Trump has been very vocal about being anti-globalisation. Australia has benefited enormously from global trade, so it’s probably good for shares like BHP Billiton Limited (ASX: BHP) and CSL Limited (ASX: CSL) that the Democrats have a bit more power.

However, his policy of providing short-term stimulus should boost the US over the next year or two. Even so, the S&P 500 has gone up over 2% today – suggesting that US investors are pleased with the result.

The Australian Dollar has strengthened from 71 cents to 73 cents against the US Dollar over the past week or so, making life better for Australian importers, but slightly harder for exporters and ASX businesses that report in dollars. However, American-based businesses are registering gains, such as Altium Limited (ASX: ALU) which is up nearly 3%.

Ultimately, I think businesses and investors like reliability. President Trump is many things, but he certainly isn’t predictable.

President Obama was stuck after the Democrats lost control in the first couple of years after winning. It may not be a good thing for America now that passing new policies is difficult with the power split between the two parties. However, I’m sure we’ll hear the phrase “checks and balances” a lot more now.

Foolish takeaway

I wouldn’t completely change my ASX investment strategy based on who wins in the US. We must keep the long-term in mind. Republican and Democrat presidents will come and go, just like they have been over the past decades.

In my opinion, the key thing to monitor over the next couple of years in the US is the interest rate, not politicians. A rising interest rate means we should remain wary of overpaying for shares.

That’s why I think this top ASX share is so good – it’s attractively priced and management are predicting continuing profit growth.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium. 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.

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