What this weekend's election means for your portfolio

With the Australian election now on, the big question right now is: which party is best for the future of our nation?

Let's be honest, whoever takes office is walking straight into a cost-of-living crisis and a housing affordability nightmare, not exactly a dream. But beyond politics, there's something every investor should be asking.

How will the election effect the direction of the stock market? Let's unpack it.

Historically, it's simple: Labor spends, Liberal saves. And while both parties are offering similar short-term sweeteners, like tax relief and lower energy bills, their broader economic strategies are worlds apart.

Liberals want to tighten the belt. They're promising to slash more than $40 billion from the national debt through fiscal consolidation, all while championing lower taxes and deregulation.

This is music to the ears of big players in mining, energy, and financials, the heavyweights of the ASX. Plus, their embrace of traditional energy alongside renewables could be the boost the energy sector desperately needs, which is already down more than 40% since September 2023.

Labor, meanwhile, is placing its chips on growth through spending, pledging $22.7 billion under the "Future Made in Australia" plan to drive domestic manufacturing and job creation.

That could help infrastructure, housing, and renewables... but let's be real, those aren't the fastest-moving sectors for growth-focused investors. Think REITs and infrastructure stocks, not exactly rocket ships.

But here's the kicker.

Since 2004, every time Labor has held office, the stock market has delivered around 8% growth over a four-year term. Respectable, sure. But they were also in charge during the 2007 crash.

Meanwhile, under Liberal governments, the market has never produced a negative return across any four-year period since 2004, with average gains of 35%. That's not just good-it's powerful.

So, what's the takeaway?

If Labor wins, prepare for slower gains in more defensive sectors. But if the Liberals take the reins, history says it could be time to load up-because the high-growth sectors might be ready to run.

And that's the result every investor should care about.

What are the best and worst-performing sectors this week? 

The best performing sectors include Information Technology, up more than 8%, followed by Real Estate, up more than 4% and Consumer Discretionary, up more than 3%.

The worst performing sectors include Materials, down under half a per cent, followed by Consumer Staples and Utilities, both up under 2%.

The best performing stocks in the ASX top 100 include Mineral Resources, up more than 13%, followed by NEXTDC Limited and Pro Medicus, both up more than 11%.

The worst performing stocks include Northern Star Resources, down more than 8%, followed by Amcor, down more than 5% and Newmont Corporation, down more than 4%.

What's next for the Australian stock market? 

Buyers have had a standout week, with the All-Ordinaries Index surging more than 2%.

Impressively, not a single trading day closed in the red, which is clear evidence of the strong bullish sentiment currently driving our market. It's a sharp turnaround from just two weeks ago, when some were forecasting doomsday scenarios for global equities.

This is exactly why it pays to stay independent and let the price action guide your thinking.

As we flagged in our previous update, the All Ordinaries has now convincingly broken through the key 8200 resistance level-a major hurdle that needed clearing. The index is now eyeing the next big milestone: 8400.

If we see a close above 8400 this week, it will mark yet another bullish breakthrough.

And from there, it's game on, the all-time high is the next logical target. At the current pace, don't be surprised if we reach that level in the coming months.

So, with the bulls firmly in control and sellers nowhere to be seen, now might be the perfect time to hunt for quality stocks with share prices building momentum.

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