How a busy election year in 2024 might affect global markets

This year's elections will take place in nations that account for more than 60% of the global economy and more than half of its people.

 

This is a list of the key elections for markets for the upcoming year, presented about chronologically:

1. Taiwan – 13^th of January

 

The opposition Kuomintang (KMT) and the ruling Democratic Progressive Party (DPP) of Taiwan are the major rivals for the legislature and the nation's leader

Should the DPP emerge victorious, it would be the party's third straight triumph—a development that would strengthen Beijing's desire to maintain control over Taiwan. Although the KMT disputes are pro-Beijing, it has always supported deeper relations with China.

Risk:

The primary source of conflict between the US and China is Taiwan. Investors have reduced their allocations to China due to concerns about higher trade penalties.

Even though a full-scale Chinese invasion of Taiwan is improbable in 2024, U.S. officials warned that it might be a catastrophic risk to global markets, possibly stopping the production of sophisticated chips and erasing $1 trillion from the world's yearly economic output.

 

2. Europe: Portugal on March 10^th, Belgium on June 9^th, European Parliament between 6^th-9^th June, Croatia between autumn/winter, Romania in November, Austria not yet confirmed.

 

The far-right Europeanists were energised by Geert Wilders's Freedom Party's unexpected victory in the Netherlands in November. Austria's poll leader is its namesake. Though left parties led there, the support for Portugal's Chega party may treble.

Importantly, far-right groups want to acquire seats in the European Union legislature and have promised to bolster immigration laws and stifle environmental improvements.

Risk:

Italy's top-performing equities and bonds for 2023 might be negatively impacted if gains for Eurosceptic parties are perceived as undermining the commitment to European integration.

The perceived riskiness of Italian debt has decreased as a result of the EU issuing more common debt to support the post-pandemic recovery.

View the rundown on more funding for Ukraine and climate policy as the European Parliament has a significant role in shaping laws and choosing the next head of the bloc's executive branch.

 

3. India – April-May

In the next national elections, Narendra Modi, the leader of the Hindu nationalist Bharatiya Janata Party (BJP), is predicted to secure a third term as prime minister. Indian investors have become the next target for money leaving China.

Risk:

A sustained rate of inflation may harm the BJP. Should it fail to secure an absolute majority, Modi will have to form a coalition.

important exporter of commodities India's export restrictions on rice, wheat, and sugar have agitated markets. Returning to fiscal populism runs the danger of increasing India's fiscal imbalance, which would necessitate financing from perhaps historically large borrowing on the domestic market.

 

4. USA – 5^th of November

 

In the upcoming months, it is expected that Donald Trump will emerge victorious in the Republican primary, paving the way for a close contest against Democratic incumbent Joe Biden. The 2020 election was rerun, and the outcome culminated in a pro-Trump crowd storming Congress to prevent Biden's victory from being certified.

Even while Trump continues to falsely claim that the 2020 election was rigged, he is currently facing criminal prosecutions in four different jurisdictions as well as several other legal proceedings. Biden describes his opponent as a danger to democracy who, should he win back control, will exact revenge on all of his many enemies.

Risk:

The violence that followed the election four years ago was dismissed by the markets. However, investors may still be concerned about the possibility of civil disturbance in the wake of a Trump-Biden rematch given the vitriolic language on both sides this time around.

As the largest economy in the world works to prevent a recession due to the delayed consequences of aggressive interest rate hikes, a contentious election may have an impact on consumer sentiment.

The likelihood of an election might affect the dollar.

If the parties capitalise on the popularity of trade barriers, anxiety over U.S.-China tensions might weaken stocks. Analysts argue that greater tariffs would hurt the yuan and euro, pull up the currency, and fuel inflation.

 

5. UK – expected by the end of 2024

 

According to surveys, the prevailing Conservative party is trailed by the opposition Labour Party, led by center-left candidate Keir Starmer.

Risk:

A tight fiscal budget, a stagnating economy, and the impending election imply that any unexpected expenditure pledges might upset government bonds. It's possible that a budget released on March 6 may include more tax cuts.

Labour intends to modify certain tax laws that might harm energy businesses and relax planning regulations, putting home builders at risk. In the wake of Brexit, it also wants tighter ties with the EU, which might strengthen the value of the pound.

(Sources: investing.com, reuters.com)