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Highlights
- Election outcome likely to influence market sentiment
- Government spending remains key driver for growth
- Focus sharpens on fiscal policy and economic stability
As Australians head to the polls this weekend, the result could hold more sway over financial markets than in previous years. While federal elections haven't traditionally had a major impact on investor behavior, 2025 may be different—especially for those keeping a close watch on the Australian Securities Exchange.
A key reason for this renewed focus is the critical role government spending has played in supporting the economy. In fact, all of Australia’s economic growth in the past year was attributed to fiscal policy, according to Chris Nicol, equity strategist at Morgan Stanley. This places added significance on the next government’s spending strategy.
Regardless of whether the current Prime Minister Anthony Albanese or opposition leader Peter Dutton forms government, economists anticipate that public spending will remain elevated in the short term. Both political parties have rolled out campaign platforms that signal a commitment to economic stimulus.
This expected continuation of government-led support is being seen as a stabilizing factor for sectors reliant on infrastructure, services, and consumer spending. Companies such as Transurban Group (ASX:TCL), which operates toll roads and benefits from large-scale infrastructure projects, and Cleanaway Waste Management (ASX:CWY), which services government waste contracts, are likely to draw attention depending on how fiscal priorities shift post-election.
Investors will also be watching how policy might influence dividend-paying companies. The hunt for reliable income sources makes ASX dividend stocks a key theme, especially in times of macro uncertainty. Utilities like APA Group (ASX:APA) and telecom leaders such as Telstra Group (ASX:TLS) are part of that conversation, offering stable cash flows often supported by public sector demand.
Meanwhile, the broader ASX200 index could see movements depending on the market’s interpretation of the election’s fiscal impact. A government perceived as fiscally aggressive may lift confidence in consumer-facing stocks like Wesfarmers (ASX:WES) or tech-driven firms such as Xero (ASX:XRO), both of which stand to benefit from economic momentum.
Ultimately, with fiscal policy at the heart of the economic outlook, the election result may act as a catalyst for market trends in the months ahead. Investors will be watching closely not just for a winner—but for clarity on where Australia's financial roadmap is heading next.
