You may have noticed that the American stock markets, and by extension, the ASX's iShares S&P 500 ETF (ASX: IVV), have had an unabashedly positive reaction to the outcome of last week's US presidential election and the imminent return of Donald Trump to the presidency.
Since last Wednesday's election (our time), the S&P 500 Index (SP: .INX) has shot up almost 5% – an extraordinary return over just a few trading days.
Since the iShares S&P 500 ETF mirrors this index very closely, it's no surprise that IVV units have also gained around 5.2% over the same period. That small outperformance can probably be attributed to currency fluctuations, which the IVV ETF is subject to as a US-based investment.
So, given this market reaction and the fact that Donald Trump will be in office until January 2029, many investors might think that now is a good time to buy more of this ASX index fund.
But is this really a good idea? Well, to answer that question, let's see what some experts have to say.
Does a Trump win mean ASX investors should buy the IVV ETF?
Experts seem divided on what a second Trump term will bring to the markets.
Matt Quaife of Fidelity International views Trump's election as positive for markets and, by extension, the ASX's IVV ETF.
In a recent letter to investors, Quaife argues that "election results often matter less for financial markets than many believe". However, he also posits that "with the US election uncertainty now behind us and the US Federal Reserve cutting rates, the prevailing environment should be supportive for risk assets".
Quaife sees the American financial sector, energy stocks and healthcare shares all standing to benefit from Trump's economic policies in particular. That would certainly be good news for the iShares S&P 500 ETF. Saying that, he also warns that Trump's plans could see a return to high inflation, which arguably doesn't bode well for longer-term S&P 500 prosperity.
A local expert, AMP's Shane Oliver, is less bullish though.
In a recent 'Oliver's Insights', Oliver argues that "Trump's policies taken together are ambiguous for US growth, negative for global growth and would likely add to inflation". Probably not what ASX owners of IVV units want to hear right now.
On one hand, Oliver sees a potentially positive reaction from the markets from another round of corporate tax cuts, which Trump has promised to instate. However, he is also warning that the sweeping tariffs that are a core part of Trump's agenda could hurt global trade, push up the American dollar, and spark a new round of inflation.
So, a lot for ASX investors and owners of the IVV ETF to digest there. Trump's famously unpredictable style makes life difficult for even the best forecasters. Let's see where the IVV ETF stands on the ASX in November 2028.
