With the United States presidential and congressional election looming large on tomorrow's calendar, you may be thinking about which S&P/ASX 200 Index (ASX: XJO) stocks to buy and sell before that outcome is clear.
While former President Donald Trump looked to have a narrow lead over current Vice President Kamala Harris in the polls in recent weeks, that lead has narrowed to a coin toss.
But if I believe Trump is going to pull a rabbit out of his hat as he did to win the White House in 2016, does that mean I should buy BHP Group Ltd (ASX: BHP) shares and sell ASX 200 stock CSL Ltd (ASX: CSL)?
Let's have a look.
Image source: Getty Images
How the US presidential candidates could impact markets
Among the more disturbing possibilities of the election is a contested outcome that could lead to turmoil akin to what was witnessed after Trump lost the 2020 election to President Joe Biden.
That could hit confidence in US financial markets and impact global banks like Commonwealth Bank of Australia (ASX: CBA).
The two candidates also have broadly differing views on taxes. Harris would likely raise taxes on corporations and the wealthiest Americans. Trump has said he'll bring taxes down.
If US corporate and income taxes do come down, it could offer a medium-term boost for the S&P 500 Index (SP: .INX), with many ASX 200 stocks also likely to catch those tailwinds. But longer term, those tax cuts will come at the price of rising US deficits if the overall tax take doesn't ramp up as Trump forecasts.
Then there are the tariffs.
If Trump is elected, we can expect a return to the trade wars with higher tariffs intended to move more manufacturing work back into the US. Harris has said she'll broadly maintain the current US trade policies.
So, would a Trump victory hinder logistics solutions company WiseTech Global Ltd (ASX: WTC), which aims to improve the efficiency of global supply chains?
And how about the crucial energy differences between the two candidates?
Trump is an advocate of opening the drilling taps on fossil fuels while cutting the Biden administration's green energy support policies. Harris remains focused on global warming and supports ongoing transitions into green energy.
Should Harris continue to gain traction over the next 24 hours, that could mean ASX 200 stocks in the lithium space, like Pilbara Minerals Ltd (ASX: PLS), may be in line for further US government funding.
With this in mind…
The vital change I'm making to my ASX 200 stock holdings
So, which ASX 200 stocks am I selling and which am I buying before the US election results are clear?
The answer, my investing friends, is none.
First, the race is too close to call. And any changes I make today may well turn out to be the wrong ones.
Second, if I've invested in the right companies at the right price, then the US election shouldn't impact their long-term prospects.
In times of uncertainty, such as the pending US presidential election, it's worth remembering this investing nugget from Warren Buffett.
"Embrace what's boring, think long-term, and ignore the ups-and-downs," the billionaire investor famously said.
What the experts are saying on the US election
Looking at the potential impact of the election on global markets and ASX 200 stocks, Josh Gilbert, market analyst at eToro, said:
The US election has dominated headlines in recent months, particularly among investors, given it causes plenty of uncertainty and markets crave certainty above all else. It's important to remember that despite this, markets primarily trade on fundamentals, not politics…
As long as the big picture remains intact with strong earnings growth and a solid economic backdrop, short-term pullbacks are likely a buying opportunity for investors.
Eric Diton, president of the Wealth Alliance, also isn't making any major portfolio changes before the results.
"We are not positioning for an outcome in the election because it is a coin flip. It does not make sense to make a bet," Diton said (quoted by Bloomberg).
Anwiti Bahuguna, chief investment officer at Northern Trust Asset Management, added:
Investors need to look through lingering election risks. Traders can't even position at this point since it's so speculative, and traders don't know what policy proposals would actually get passed from either candidate through Congress.
With most ASX 200 stocks in the green today, the benchmark index is up 0.5% on the eve of the US presidential election.
