By Libby George and Dhara Ranasinghe
LONDON, Oct 2 (Reuters) – Brazil’s voters will choose from a field of presidential contenders with two familiar frontrunners on Sunday – President Luiz Inácio Lula da Silva and right-wing challenger Flavio Bolsonaro – in a closely watched race.
The contest is one of several remaining races out of some 40 worldwide this year that could impact financial markets.
Here’s a look at the coming elections in focus for financial markets, and a roundup of those that have already happened:
BRAZIL
Polls show incumbent Lula and Flavio, the son of former President Jair Bolsonaro, are neck-and-neck, and an October 25 runoff is likely.
Flavio has sought to capitalise on cost-of-living concerns. Investors are broadly positive about Brazil, but fiscal worries, underpinned by rising spending, are the main issue.
“Fiscal fundamentals are the most concerning risk of a potential Lula re-election, and current (bond) spreads do not price that risk,” said Ninety One portfolio manager Christine Reed.
Still, only a small portion of Brazil’s spending is discretionary, meaning lasting adjustments would have to reach pensions, payrolls or social benefits.
Capital Economics said a Flavio win could boost equities between 10% and 20% and pull local currency bond yields down, while a Lula victory could lead to equity underperformance.
ISRAEL
Israeli voters will select members of the country’s 120-seat parliament, the Knesset, in October 27 elections.
Polls suggest a defeat for Prime Minister Benjamin Netanyahu, but no single party has ever won an outright majority, and a coalition typically forms governments.
Israel’s economy has proved remarkably resilient to the Middle East conflict. But Moody’s lowered its 2026 economic growth estimates, and raised its debt forecast, due to elevated geopolitical risks and fragile ceasefire agreements.
The country’s central bank chief warned that election winners must rein in defence-led state spending and invest more in education, infrastructure and other growth engines.
US
The US November 3 midterm elections take place amid record diesel prices and surging government borrowing costs that have boosted mortgage rates.
Voters will determine whether Republicans retain control of both chambers of Congress or whether Democrats gain power to shape President Donald Trump’s final two years in office.
While some analysts warn a divided Congress could be bearish for the US dollar, the results of the election could impact everything from the Iran war to energy prices to Trump’s erratic tariff policy efforts.
NEW ZEALAND
New Zealand’s reputation for political stability will be tested by bitterly fought November 7 elections, with opinion polls suggesting Prime Minister Christopher Luxon’s coalition could lose power.
A redefined mandate for New Zealand’s central bank and policy reversals are among the prospects making investors uneasy.
KEY PAST ELECTIONS
JAPAN
Prime Minister Sanae Takaichi’s ruling Liberal Democratic Party (LDP) secured a landslide win in February elections, giving the green light for fiscal stimulus.
Takaichi’s ambitious spending, and Japan’s worsening finances, sent benchmark government bond yields to their highest levels in decades. Takaichi has said the government hopes to cap new bond issuance at 40 trillion yen ($255 billion) for next fiscal year’s budget.
UK
The ruling Labour Party’s heavy losses in May local elections and parliamentary votes in regions such as Scotland paved the way for the resignation of Prime Minister Keir Starmer.
Investors are closely watching how new PM Andy Burnham and finance minister John Healey plan to boost Britain’s long-term economic growth given fiscal constraints. The October 28 budget is shaping up as the next test of sentiment.
Eurasia Group puts the odds of an early general election in 2027 at 35%. Burnham has said he will wait until the next election is due in 2029.
GERMANY
The country’s leading Christian Democrats suffered in two German states in September, heaping pressure on Chancellor Friedrich Merz to keep the far-right AfD at bay.
The shock of the election defeat could force him to water down his promised reform agenda to revive the economy. The uncertainty, alongside renewed political tension in France, is a headwind for the euro, which has hit its lowest levels in over a year.
HUNGARY
Centre-right Prime Minister Peter Magyar’s victory in April elections ended the 16-year rule of right-wing leader Viktor Orban.
Magyar’s pledge to steer Hungary on a pro-European path – and secure the release of billions of euros in suspended European Union funding – boosted investor views of the nation’s prospects and enabled significant jumps in consumer confidence.
LATIN AMERICA
Colombia and Peru elections earlier this year added to a rightward shift in Latin America welcomed by some investors.
Lawyer Abelardo de la Espriella secured a narrow victory in Colombia’s June presidential election, pledging to reduce the size of the state, broaden the tax base, cut corporate taxes and restart oil exploration.
In Peru, conservative Keiko Fujimori secured victory in a razor-thin June race. Ratings agency Moody’s said a Fujimori government would preserve policy continuity, bolster investor confidence and boost economic growth.
(Reporting by Libby George and Dhara Ranasinghe; Editing by Andrew Cawthorne)
