5 major elections in 2024 – how did they move stock markets and what’s next?

2024 was the year of the elections.

Half of the entire global population live in countries that held elections over the course of the year.

Here are some of the standout elections.

This article isn’t personal advice. Remember, investments can rise and fall in value, so you could get back less than you invest. If you’re not sure if an investment’s right for you, ask for financial advice. Remember, yields are variable and past performance isn’t a guide to the future.

UK

In July Labour secured a majority to take over from the Conservatives.

Since then, the FTSE All-Share has risen 2.29%. The markets generally reacted positively to Labour’s return to power as they pledged to focus on growing the economy. However, it’s been rockier since, with Chancellor Rachel Reeves’ Autumn Budget given a lukewarm reception.

Investors were hoping for a more pro-business Budget. But Reeves announced a rise in the employer contribution to National Insurance, adding to the cost of employing worker.

Many businesses have said this will affect their profits and they might have to pass on the extra costs to consumers as a result.

US

Arguably the most important election in the world happened in November with Republican candidate and former president Donald Trump defeating current Democrat Vice President Kamala Harris in the 2024 US Election.

It was expected to be a coin-flip as the two candidates battled over the swing states. But it wasn’t as close as the polls suggested, and Trump won convincingly.

Although the US Election was only two months ago, since then the US stock market has risen 4.54%.

The Russell 2000 index of smaller companies in the US, which are generally more domestically focused than their larger cap peers, has risen 5.27%.

The market has reacted well to Trump’s pledges of lowering business and income tax, sweeping deregulation and tariffs on imports. Trump’s hope is this boosts US companies and makes them more attractive than companies abroad.

However, economists are concerned that this could reignite inflation which has generally been declining.

Cutting taxes encourages consumers to spend and businesses could pass on the costs if they have to pay higher tariffs on imports. This could lead to problems later, if it causes inflation to rise.

The Federal Reserve (Fed) might need to increase interest rates again in response. Cracks could also appear in the bond market as Trump’s policies look set to only enlarge the already growing national debt, putting upward pressure on yields.

India

The biggest election when it comes to voting numbers was in India. Roughly 969 million people registered to vote over a six-week period.

Current Prime Minister Narendra Modi remained in charge for a third term, but only just. His party Bharatiya Janata Party (BJP) lost their majority, however he was able to pull on his allies in the National Democratic Alliance to form a government.

Since 5 June when the results were announced, the Indian stock market has risen 6.97%.

Modi aims for more of the same as his previous 10 years in-charge and wants India to become the third largest economy in the world. He hopes to continue current infrastructure projects, but also his work on labour and land use in an attempt to move investment away from China.

Japan

The Japanese election largely went under-the-radar as the snap election was called just before the US election. But it was surprisingly dramatic for Japan.

Since 1955 Japan has essentially been a single-party country with the Liberal Democratic Party (LDP) generally having the majority.

But after a political corruption scandal involving senior members of the party, while households continued to struggle with inflation, stagnant wages and a slowing economy the LDP finally looked vulnerable.

The LDP still managed to win the most seats, however, they didn’t have enough for a majority.

President Shigeru Ishiba has vowed to continue running the country without a majority after forming a coalition with Kimeito, and this could mean he finds it more difficult to pass policies through government.

Despite the uncertainty caused by the election, the Japanese stock market has rallied 7.33%. This was largely down to the fall in Yen which can happen in terms of uncertainty.

Japanese companies are known for being large exporters of goods. A weaker Yen makes their exports cheaper and more attractive to buyers abroad and this has boosted corporate earnings.

France

Another majority was lost in France back in July – current President Emmanuel Macron’s Centrist Alliance were second behind the New Popular Front party.

Macron finally announced a new government three months later as he aligned with more right-wing parties to form a minority coalition government headed up by Prime Minister Michel Barnier.

Since the July election the French stock market has fallen -5.55%.

The uncertainty hasn’t helped the stock market as investors fear what will happen next.

France is also desperately trying to reduce its deficit due to the need to comply with EU rules. This is something Barnier tried to address in the budget, but not having a majority has led to stiff opposition.

Despite Barnier trying to compromise on his proposed budget, a vote of no confidence was called, which he lost. He became the shortest-lived prime minister since the inception of the Fifth Republic in 1958. This has added to the uncertainty as Macron must once again try and find a new prime minister.