A Springtime International Politics Roundup

Editors’ Note: MarketMinder prefers no politician nor any party. We assess developments for their potential economic and market effects only.

Non-US politics’ busy 2025 continued this week, with new developments in Canada, South Korea and Australia. While none are make-or-break for stocks, in our view, all highlight (to varying degrees) the falling uncertainty we think is likely to help markets this year.

Carney Calendars Canada’s Election

New Canadian Prime Minister Mark Carney called a snap election Sunday, taking another step toward easing the uncertainty that has hung over Canadian markets in recent months. The move will send Canadians to the polls on April 28, where they will elect a new parliament—including a new Prime Minister. This ends the question over when the next election, due by October, would occur. When his predecessor, Justin Trudeau, was floundering in the polls, analysts speculated his successor would wait in hopes of rebuilding the Liberal Party’s support. But then Carney’s ascent sparked a polling surge that put him and the Liberal party ahead of the opposition Conservative party and its leader, Pierre Poilievre.^[i] This heightened expectations for Carney to strike while the iron is hot, and that is now happening.

The Liberal’s lead over the Conservatives has some saying Carney is sure to win an outright majority, improving on Trudeau’s minority government. But elections aren’t cakewalks, and early polls aren’t all telling. They offer a baseline read on where voters broadly stand at the start, but they can’t predict how either campaign will evolve. National polls are also of less use in Canada, where voters elect representatives by constituency (or “riding,” as they are known north of the border).

Little separates Carney and Poilievre on the policy front, as both have pledged income tax cuts (Poilievre’s slightly larger) and hefty public investment in infrastructure and defense. Rather, headlines suggest voters’ key issue is which candidate can best handle President Donald Trump’s tariff threats and ongoing jawboning about a US/Canadian merger. Both Carney and Poilievre have openly opposed these, but so far Carney’s tough talk has gained more traction. Will this last? Stay tuned. Anything could happen.

We will probably have more to say about the policy and market implications of the next government as the outcome crystalizes. For now, the primary effect is falling uncertainty—bullish. Carney’s snap election announcement answers a question, giving stocks some clarity on the timing—investors no longer need to guess at when the contest will occur. But political uncertainty should continue falling as the next parliament becomes clearer—generally a plus for Canadian stocks, which have already enjoyed a decent start to the year.

South Korea Clears Some Political Fog… for Now

Impeached South Korean Prime Minister Han Duck-soo is back as acting president—a tiny step toward resolving uncertainty, but there is much more to come. As a refresher, Han was ousted just two weeks after becoming acting president when the legislature impeached President Yoon Suk Yeol.^[ii] This is because, shortly after assuming office, Han vetoed two special counsel bills investigating Yoon and his wife and the appointment of three justices to the Constitutional court (the latter having already been approved by the National Assembly). These vetoes immediately triggered an impeachment motion, which passed unanimously on December 27.

But the Constitutional court overturned this decision 5-1 Monday, citing no evidence of Han’s involvement in Yoon’s illegal martial law declaration (which the impeachment motion had also alleged) and declaring his judicial vetoes only a minor constitutional breach and not worthy of removal from office.

Hence, Han will replace Finance Minister Choi Sang-mok, who had succeeded him as acting president, for now. But South Korea’s political future remains uncertain pending Yoon’s final impeachment ruling. The court hasn’t revealed an exact date, but it has until June 12 (180 days from Yoon’s original impeachment) to decide. If Yoon’s impeachment is upheld, South Korea has 60 days to elect a new president. If it is overturned, Yoon will return to office to oversee a politically fractured country. In both cases uncertainty will fall as investors get clarity, though an election probably drags the process out somewhat.

In our view, this saga is an important illustration of how markets work. Korean stocks had a poor second half in 2024, as an oversupply of memory chips (a key Korean export) weighed on its large Tech companies.^[iii] The country’s impeachment crisis happened around what is, to date, the low point. But they have bounced back, rising 12.6% year to date, beating Emerging Markets and the MSCI All Country World Index.^[iv] To us, this is a prime example of how markets quickly move on, rallying ahead of falling uncertainty rather than waiting for clarity.

Australia’s Budget Presents Pre-Election Fodder

Giving a lesson in how the typical process of currying favor with voters ahead of an election works, Australia’s Labor-led government released its 2025 budget on Tuesday, complete with tax cuts for lower-income households … then scheduled a general election for May 3. Similar to Canada, we now can move past questions of when an election will occur (Australia’s was due by May 17) and start looking toward the contest.

And as in Canada, the outcome looks like a tossup. The incumbent Labor party is trailing the opposition Liberal-National Coalition in polls, 30.6% to 38.5%.^[v] But here, too, that is just the baseline. Both parties will make their best pitch, and the Budget looks like Labor’s opening salvo. Perhaps the most eye-popping item was a planned $17.1 billion in tax cuts, which Treasurer Jim Chalmers claimed will provide relief for lower-income workers.^[vi] Namely, the policy will reduce Australia’s lowest tax rate from 16% to 15% in mid-2026 and again to 14% in mid-2027.

Using budget flexibility for fiscal giveaways is a time-honored pre-election tradition for incumbent governments. To name just two, last year’s pre-election budgets in the UK and Ireland both saw incumbents axe taxes. Sometimes it works, sometimes it doesn’t. Sometimes governments are able to push through the changes before the election, letting voters start reaping a little bit of the fruit before the vote. In Australia’s case, the Budget looks more like a sales pitch. The Liberal-National Coalition will then make their sales pitch.

So Tuesday’s Budget doesn’t make election outcomes any clearer. Similar to Canada, the results likely boil down to campaigning—impossible to predict now. But, regardless of outcome, falling uncertainty Down Under should be another potential tailwind for non-US stocks.