From India to the US: How the 2024 elections are impacting world markets

Election season is upon us. Not just India, but several other countries, including the United States, are set to hold elections this year. Taiwan, Portugal, Russia and Turkey have already held polls.

By the end of 2024, countries accounting for more than 60 per cent of global economic output and over half of the world’s population would have cast their votes. While markets have so far ignored the results, the United States presidential race in November could impact all aspects from international trade to emerging market debt.

Let’s take a closer look at key elections around the world.

India

India is set to hold Lok Sabha elections in seven phases from 19 April to 1 June, with the counting of votes on 4 June.

More from Explainers

How ChatGPT is becoming everyone’s BFF and why that’s dangerous This Week in Explainers: How recovering from Gen-Z protests is a Himalayan task for Nepal

The Narendra Modi-led Bharatiya Janata Party (BJP) is aiming for a comeback for a third straight term with a thumping majority for the party and its alliance National Democratic Alliance (NDA), while the Opposition INDIA bloc is trying to unseat the saffron party.

Continuous inflation, especially in food prices, and unemployment could be a challenge for the ruling BJP. The Central government has already restricted rice, wheat and sugar exports to control domestic prices.

A shift back to fiscal populism risks extending India’s already wide fiscal deficit, leading to more borrowing. As per the IMF estimates, public debt could hit 82.3 per cent by 2024-25.

Impact Shorts

More Shorts

Ghaziabad woman dead, pilgrims attacked in bus… How Nepal’s Gen-Z protests turned into a living hell for Indian tourists

Were bodyguards involved in Charlie Kirk’s shooting? The many conspiracies surrounding the killing

Meanwhile, Sensex topped the 75,000 mark on Tuesday (9 April) for the first-ever time to reach a record high of 75,124. Nifty50 climbed a new high of 22,765.

It took a little less than a decade for Sensex to cross the 75,000 mark from 25,000-mark which it surpassed in May 2014 when PM Modi first came to power. Analysts predict this bullish trend in the Indian stock market will continue for the coming days.

United States

The US is set for a rematch between President Joe Biden and his Republican rival Donald Trump in the November presidential elections.

Trump could impose a 10 per cent universal import tariff and levies of 60 per cent or more on China if he comes to power. European Union policymakers are concerned that the Republican leader could bring back tariffs on imports of European steel and aluminium that were suspended by Biden.

A rise in tariffs could fuel inflation, lift the dollar and hurt other currencies.

Barclays analysts see the euro falling sharply if tariffs are imposed, and eyeing parity against the dollar, if Trump imposes 20 per cent tariffs on European carmakers.

Tina Fordham, founder and geopolitical strategist at Fordham Global Foresight, told Reuters there was complacency around a decisive result, adding: “Instead, investors should position for an election that is highly contested, with a delayed result via recounts or a Supreme Court referral to be factored into timing – or even civil unrest.”

United Kingdom

The general election in the United Kingdom is expected by the end of this year and has to be held no later than 28 January 2025.

In May, Britain will hold local and mayoral elections, which will be a major electoral test for the ruling Conservative Party, which is trailing the opposition Labour Party in the polls.

Amid a flat-lining economy and with households still reeling from high inflation, Chancellor of the Exchequer Jeremy Hunt last month offered tax cuts in his budget to revive election hopes.

Labour, keen to show it can be trusted on the economy, has set out fiscal rules it would stick to if elected. It also wants closer EU ties post-Brexit, which could lift the sterling.

South Africa

South Africa is headed to polls on 29 May. The ruling African National Congress (ANC) is projected to lose its parliamentary majority for the first time since 1994 when Nelson Mandela led it to power.

South Africa is hit by unemployment and economic stagnation. This, along with power cuts and graft allegations, has disenchanted voters against the ANC, which could have to tie up with the Democratic Alliance or the far-left Economic Freedom Fighters.

Ahead of the general election, the government could increase spending, boosting debt. If the ANC allies with a leftist party, social spending could rise. Worries about a weak currency and strained public finances could slow down rate cuts.

Central Bank governor Lesetja Kganyago said election uncertainty was “keeping the country’s risk premium elevated”, referring to the return investors demand due to perceived risks.

Europe

Europe is witnessing a surge of the far-right . From Sweden to Portugal, the populist forces have been making a mark.

Amid this, Europe’s parliament will go to polls in June. Nationalist and eurosceptic parties are expected to bag a record number of votes in the elections.

The centre-right European People’s Party has maintained a lead in the polls but it might be challenging for it to secure a majority, possibly forcing it into policy trade-offs. Support for Ukraine and climate policy are in focus.

Italian assets could suffer if gains for populist parties are seen weakening a commitment to European integration. Yet, the euro-scepticism evident in many elections in the 2010s and early 2020s has eased, leaving the euro relatively unperturbed.

European Parliament elections will be held from 6-9 June, while Belgium will vote on 9 June. Croatia will hold elections in autumn/winter and Romania in November. Austrian election dates are yet to be announced.

Mexico

Mexico will vote on 2 June to elect the president, every member of Congress and eight state governors. The presidential candidate from the ruling National Regeneration Movement (MORENA) party, ex-Mexico City mayor Claudia Sheinbaum, has a lead.

MORENA is pushing for a two-thirds congressional majority, which would enable it to make constitutional changes without opposition support. Polling suggests it could fall short.

A MORENA congressional supermajority is among the market risks, as the party could then pass major reforms unpopular with business leaders, including in the energy sector.

Venezuela

President Nicolas Maduro is running for a third term in Venezuela’s 28 July elections. His challenger remains unclear as the South American country grapples with the social, political and economic crisis.

The opposition primary winner, Maria Corina Machado was banned from participating and her chosen alternate was not allowed to register.

In exchange for work toward fair and free elections, the US lifted oil sanctions until mid-April and removed secondary trading bans for certain Venezuelan bonds and state oil company PdVSA’s debt and equity.

Re-instated sanctions could hurt; oil exports recently hit a four-year high, and bond prices rallied after the sanctions pause. Venezuela could also try to restructure its debt.

With inputs from Reuters