Markets’ crazy 2024 election journey continues as voting approaches in the US

LONDON: Elections in Japan could trigger the market’s next reversal in a year when countries with half the world’s population will vote. But markets are focused on the US presidential election, the most important race for investors and global leaders alike.

Here you can find a selection of recent and upcoming votes and how they affect markets.

DEVELOPED MARKETS

1. JAPAN

The uncertain outcome of Sunday’s election could create further shock for markets reeling from the Bank of Japan’s surprise rate hike in July.

Japanese Prime Minister Shigeru Ishiba supports normalizing monetary policy to boost the yen and bank profits. But its recent popularity suggests Japan is moving toward a coalition government and some opposition parties want the incentives to continue.

This could increase yen volatility, complicating the BOJ’s policy outlook. Bets on the yen, trading around 152 per dollar, have rapidly moved from weakness to strength since July. The BOJ’s October 31 meeting could be caught in the middle of coalition horse trading.

2. UNITED STATES OF AMERICA

Democratic Vice President Kamala Harris and Republican former president Donald Trump are in full contention ahead of the November 5 US elections.

Investors are taking seriously Trump’s chances of winning, which could lead to higher tariffs. This increased support for the dollar, as increases in consumer prices could reduce US interest rate cuts.

Bets on Trump’s tax cuts helped send U.S. stocks to record highs, but the rise stalled due to the weight of uncertainty. Gold is close to record levels with safe haven purchases, and the VIX index, which shows expected fluctuations in the stock market, is above the 2024 average.

Investors are also preparing for a controversial outcome if the results are close.

3. ENGLAND

Britain’s October 30 budget could determine whether investors maintain their post-election optimism or succumb to concerns about finance minister Rachel Reeves’ bleak analysis of the economy.

The landslide victory in July sparked hopes that the new Labor government would deliver on promises to control borrowing, fix crumbling public services and encourage investment.

Since then, Labor’s pledge not to raise workers’ taxes has raised fears that raids on investment gains will lead to more capital being withdrawn from listed companies, and Reeves has signaled that borrowing will increase.

4. EUROZONE

Austria’s Eurosceptic, Russia-friendly Freedom Party won parliamentary elections in September; It was the latest far-right wave to hit the continent, disrupting fiscal policymaking as major economies stagnated.

In debt-laden France, Prime Minister Michel Barnier’s new minority government may rely on the approval of the far-right to pass a budget after early summer elections.

Portugal’s centre-right minority government may also need support from the far-right Chega party, which was successful in the March elections, for its first budget.

And German political parties are trying to keep the far-right Alternative for Germany out of power in Thuringia after winning elections in the state last month.

EMERGING MARKETS

1. LATIN AMERICA

The pension reform plan, which will lower the retirement age in the elections held in Uruguay on October 27, dealt a blow to the peso as investors worried about its financial cost.

The Mexican peso has also soared since June’s elections, giving Claudia Sheinbaum, Mexico’s first female president, an unexpected majority.

But nothing looks like a possible Trump victory in the region.

Trump pointed to a tariff of over 200 percent on vehicle imports from Mexico; vice presidential candidate J.D. Vance has proposed a 10 percent rate on tax remittances, which account for roughly a quarter of many economies.

2. EASTERN EUROPE

Parliamentary elections to be held on Saturday in Georgia, where the ruling Georgian Dream party is considered close to Russia, are seen as a contest between Russia’s objection and the West’s objection.

Moldovan voters narrowly backed EU membership in a 20 October referendum that was marred by allegations of Russian-backed interference, and President Maia Sandu, who backed the referendum, faces a runoff on 3 November.

The elections to be held in Romania in November and December repeat the Russia-Europe discourse. The far-right Alliance to Unite Romanians, which opposes military aid to Ukraine, is in second place in the polls.

Analysts think polarized domestic politics could slow down structural reforms.

Bulgarians go to the polls on Sunday for the seventh early election in four years.

3. SRI LANKA

The snap parliamentary election on November 14 could determine whether newly elected President Anura Kumara Dissanayake can deliver on his campaign promises of tax cuts and aid to the poor.

The Marxist-leaning Dissanayake coalition currently has only three seats in parliament. Investors feared Dissanayake would break the bondholder debt agreement and try to reshuffle a significant IMF bailout. Instead Dissanayake’s government largely followed both.

4. AFRICA

The economic crisis in Ghana will leave its mark on the gold and cocoa exporter’s presidential elections on December 7.

He managed to complete a $30 billion foreign debt restructuring before the vote.

But there are concerns of overspending ahead of the election, which Ghana needs to avoid if it is to keep up with the $3 billion IMF rescue plan.

On the other hand, Mozambique’s dollar bond fell after gunmen killed an opposition lawyer and a party official following the controversial presidential election on October 9, in which the ruling party Frelimo remained in power.

Mozambique’s fiscal difficulties have led to warnings that it could miss domestic debt payments or implement a distressed debt swap.