A week before elections, global markets remain uneasy - says analyst

JOHANNESBURG - Financial analysts believe global markets remain uneasy exactly a week before the polls.

South Africa’s elections next week and the United States (US) elections in November are among events on the geopolitical calendar still expected to move economic indicators.

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The calendar in 2024 is historic in terms of geopolitics, with high-stake elections still on the agenda.

The chief investment strategist at Investec, Chris Holdsworth, said the global elections still to come were likely to impact bond yields.

He said a secondary concern is the impact on central banks.

“What I mean by that is if we land up with governments still deciding to take up large deficits, we still land up with debt-to-GDP [gross domestic product] still going up. 

“That implies that we’re likely to see inflation proving to be stickier than expected, and that means central banks will be put in a corner and they’ll be unable to cut as much as markets would like.”

Holdsworth said analysts would also keep a close eye on shifts in fiscal policy after the elections, if any.

This will determine the budget and deficit expectations, which will in turn impact the inflation and interest rate forecasts globally.