Beyond the War: A Political Roundup Covering America, Canada and Denmark

Editors’ Note: MarketMinder Europe is politically agnostic, preferring no party or any politician. We assess developments for their economic and market implications only. MarketMinder Europe also doesn’t make individual security recommendations. Those mentioned here merely represent the broader theme we wish to highlight.

With commentators we follow focussed mainly on the conflict in the Middle East, several recent political developments haven’t received much coverage in publications we follow. Here we will round up a few we find noteworthy from the developed world, including a special US House of Representatives election that queued up a runoff in Georgia, Canada’s Prime Minister inching toward a parliamentary majority and a lingering snap election in Denmark. Here is our take on them and what we think they mean for markets.

A Georgia Runoff Awaits

Starting in America, the special election to fill former Republican House Representative Marjorie Taylor Greene’s seat is headed to a runoff—and may flip to the Democrats. Greene’s vacant seat is in Georgia’s 14^th district, which voted nearly 70-30 for US President Donald Trump in 2024’s presidential election—quite a wide margin.^[i] However, in last Tuesday’s vote, Democrat Shawn Harris edged out Trump-backed Republican Clay Fuller, receiving 37.3% and 34.9% of votes, respectively.^[ii] According to Georgia law, when no single candidate receives more than 50% of the vote, it automatically triggers a runoff between the top two candidates. Hence, a showdown looms on 7 April. The winner will serve out Greene’s term through 3 January, 2027. But they will also head straight into Georgia’s 19 May congressional primary elections and potentially November’s midterm elections as the incumbent, which likely amounts to a slight advantage, in our view.

More immediately, if Fuller wins, Republicans’ small House advantage would rise to five seats (219 – 214), which doesn’t grant the party a significant edge to pass divisive bills (though they likely won’t want to in a midterm year anyway, in our view). Conversely, a Harris runoff victory would bring Republicans’ House edge down to 218 – 215, tightening gridlock further. Beyond that, we think the midterm implications here bear watching: Is support starting to tilt toward the Democrats, or was this a case of a crowded field splitting the vote? Fully 17 candidates were in the race, and collectively, Republican candidates won more votes.^[iii] We think the main surprise here is the runoff being between representatives from America’s two main parties, not two Republicans. And, further muddying the water, timing may be an influence, given the ongoing war.

Still, Harris’s strong showing may hint at what our research finds is the normal trend: sitting presidents’ parties losing power in midterm elections. If this repeats in the runoff, a Harris win may hint at a tough midterm road for Republicans, given how solidly Republican the district was in 2024.^[iv] From a market standpoint, though, we doubt this significantly affects stocks’ political driver. Republicans hold their already thin majority regardless of outcome, so this won’t materially shift how Washington can legislate. But we think a Harris victory, or even a good showing in the runoff, suggests history’s typical pattern of the presidents’ party losing seats will likely hold again.

Canada’s Carney Eyes Majority

Earlier this month, Canadian Prime Minister (PM) Mark Carney called by-elections on 13 April to fill three House of Commons vacancies.^[v] If members of Parliament (MPs) from his Liberal party win two of them, it would flip from a slight minority government to a thin majority—Carney’s first since becoming PM last spring.^[vi] The move follows several MPs’ flipping their allegiance to the Liberal party in recent months, capped by sole Nunavut MP Lori Idlout last Wednesday.^[vii]

A Liberal victory seems the likeliest outcome, in our view, given polling, reporting and historic voting in these districts.^[viii] Two seats are in Toronto, heavily favouring the Liberals, whilst a third in Montreal should be tightly contested. But, again, Carney just needs two.

So Carney likely gets his thin majority. Whilst the end of his minority government would loosen gridlock somewhat, we don’t think the tiny edge totally eliminates it. Consider: One or two Liberal MPs could stall or force legislation to get watered down—possible, given Liberals’ internal divisions on climate and fiscal policy. For instance, a domestic energy production push could meet opposition from Liberals’ internal “environmental caucus.” Or, as we saw with last November’s Budget, Liberal MPs vary widely on items like spending and taxes.^[ix] These issues could flare once more. And, again, several MPs just changed parties to push Liberals this close. Will they conform to their new party’s aims so soon after a switch?

For markets, we think this preserves the likelihood that sweeping proposals, should they take effect, are likely less onerous than feared. Any potential Liberal infighting probably also gives businesses and individuals time to adjust and prepare. In our view, this should help keep stocks’ legislative risk aversion low—a positive, based on our research.

Denmark Dials Up Snap Election

On 26 February, Danish PM Mette Frederiksen called an early snap general election, scheduled for 24 March.^[x] Reports suggest Frederiksen’s ruling Social Democrats (S&D) aim to capitalise on a recent popularity pop after she rejected Trump’s recent bid for the US to acquire Greenland.^[xi] To us, it seems her target is boosting her coalition government’s standing in Parliament.

Frederiksen currently heads a coalition consisting of her centre-left S&D, the Liberals (Venstre) and the Moderates (Moderaterne), with added support from two small parties representing Greenland and the Faroe Islands to give it a majority in the 179-seat Folketing.^[xii] Polls suggest that even with her popularity rising lately, this trio will garner around 65 seats, down from its present holding and well short of the 90 needed for a ruling majority. If these polls are accurate, more coalition-building looms ahead.^[xiii] Not that polls are 100% predictive, as seen in Japan’s Liberal Democratic Party winning in a landslide and defying previous projections in last month’s snap election, but we find they help set baseline expectations.^[xiv]

Still, our observations point to greater party parity this time. Frederiksen’s ruling coalition has lost support broadly since 2022’s election—as last November’s municipal elections illustrate—with voters expressing frustrations around cost-of-living and welfare programs.^[xv] They likely need support from bigger parties than the small Greenlandic and Faroese parties supporting them now. Frederiksen’s coalition could try to broaden their political scope and partner with centre-right bloc members Liberal Alliance and Conservatives. Or veer left and team up with the socialist Red-Green Alliance and social-liberal Radikale party, where more policy similarities lie. Either way, we think the likeliest outcome is a complex, multiparty coalition arrangement—a recipe for gridlock, in our view.

Now, our research suggests gridlock is usually bullish. But we find things are more complicated in countries with small markets and high single-company concentrations, like Denmark.^[xvi] Despite last year’s gridlocked government, poor returns amongst two of Denmark’s largest companies, Novo Nordisk and Ørsted, seemed to outweigh that.^[xvii] Politics is just one driver, in our view, and its power depends on the country’s market characteristics. Hence, we think gridlock in Denmark’s next government would be a tailwind, but it is only one factor that could be overpowered by others.