June Column: Testing Markets’ Apathy Towards Elections

June is shaping up to be a pivotal month for global markets as a slew of elections around the world are set to test investors’ seemingly nonchalant attitude towards political events. With European Parliament elections kicking off on June 6-9, followed by the UK elections and the first televised debate for US presidential candidates on June 27, the month is packed with significant electoral milestones.

Despite the current buoyant economy and record-high stock markets, the upcoming elections could potentially shake up the status quo. Many investors have been increasing their currency hedging length in options or forward rates in anticipation of potential market shifts due to the elections.

While market volatility remains relatively low compared to previous years, the upcoming elections could serve as a reality check for investors. The outcome of these elections, especially the US presidential race between Joe Biden and Donald Trump, could have far-reaching implications for global markets.

As the election dates draw nearer, the frequency of opinion polls is expected to increase, providing a clearer picture of the potential outcomes. While some strategists believe that the elections may not have a significant impact on market dynamics, others are closely monitoring the evolving political landscape for any signs of market sensitivity.

With the stakes high and critical geopolitical issues at play, investors may find it harder to ignore the political noise in the coming month. The outcome of these elections could have a profound impact on the direction of global markets, making it a crucial period for investors to stay vigilant and adapt to potential shifts in the political landscape.