Micah Jonah, February 2, 2026
Elections across major and emerging economies are set to inject fresh uncertainty into global financial markets this year, adding to volatility already driven by shifting United States policies, rising geopolitical tensions.
From a snap election in Japan to high stakes presidential races in Latin America and crucial mid term polls in the United States, voters’ choices in 2026 could significantly influence currencies, bonds and investor confidence worldwide.
Japan heads to the polls on February 8 in one of its most unpredictable elections in years. Prime Minister Sanae Takaichi is seeking to translate personal popularity into parliamentary strength to push through expansionary fiscal policies. While polls suggest her approval ratings have dipped slightly, investors are bracing for continued pressure on Japanese government bonds.
Some analysts expect 10 year yields to climb towards 3 percent this year, up from just above 2 percent currently. The yen has also become increasingly sensitive to fiscal policy expectations rather than the traditional interest rate gap with the United States.
Across Latin America, voters will test the region’s recent rightward political shift. In Colombia, citizens could vote up to three times beginning in March to elect a new president and legislators, replacing leftist leader, Gustavo Petro. Markets are watching closely, hoping a change in leadership could restore more orthodox economic policies. Colombian equities outperformed regional peers last year, and bond investors are betting that political change could bring fiscal discipline.
Hungary’s April election is viewed as the opposition’s strongest chance in years to unseat Prime Minister Viktor Orban after 16 years in power. Rising living costs have dominated the campaign, prompting Orban to deploy fiscal giveaways. Credit rating agency, Fitch has already downgraded Hungary’s outlook to negative, citing weakened public finances ahead of the vote. A victory by the opposition Tisza party could improve relations with the European Union and unlock billions of euros in frozen funding, potentially easing fiscal pressures.
In the United Kingdom, May’s local elections are drawing unusual attention from investors. Prime Minister Keir Starmer’s Labour government is struggling in opinion polls, trailing the populist Reform UK party. Markets have shown sensitivity to any signs of political instability, with recent bond selloffs reflecting fears of fiscal uncertainty should leadership change.
Africa also features prominently in this election heavy year. Ethiopia and Zambia, both recovering from debt defaults, will hold elections during the summer. Ethiopian Prime Minister, Abiy Ahmed is expected to retain power amid an opposition boycott, while Zambia’s President, Hakainde Hichilema is favoured to win despite lingering public frustration over living standards. Investors are monitoring both countries as potential frontier market opportunities, particularly Zambia, whose economy has shown resilience.
Brazil’s October presidential election is another major focal point. President Luiz Inacio Lula da Silva is leading early polls against right wing challenger Flavio Bolsonaro. Analysts warn that a fourth term for Lula could weigh on asset prices due to concerns over persistent fiscal deficits and rising debt. However, some investors see Lula as a known and pragmatic figure likely to appoint credible economic managers.
In the United States, November’s mid term elections will determine control of Congress, serve as a critical test for President Donald Trump. With affordability and cost of living dominating voter concerns, the administration is under pressure to deliver stronger economic growth and calmer markets. Historically, the incumbent party tends to lose seats in mid term elections, raising the stakes for policy direction in the months ahead.
As 2026 unfolds, investors are bracing for political outcomes that could reshape fiscal policy, debt trajectories and market sentiment across continents. With so many ballots being cast, the year ahead is shaping up as one where politics and markets will be more tightly linked than ever.
