Some snapshots from financial markets this morning and what to expect today and beyond as the world adjusts after the results of the U.S. presidential election and President-elect Donald Trump.
OPEC was already struggling to finalize a deal on production cuts this month. The Organization of Petroleum Exporting Countries faces increasing urgency to take measures that will support oil prices as Trump’s surprise victory threatens to deepen a market sell-off, said UBS Group AG. Yet the uncertainty arising from Trump’s policies — from climate change to the U.S. shale industry and sanctions on Iran — will make resolving differences between producers even harder.
If you want a snapshot of what the global energy map will look like under Trump, look no further than the stock market.
Glencore, the world’s top coal trader, surged more than 5 percent on Wednesday. Vestas Wind Systems A/S, the world’s biggest wind-turbine maker, plunged as much as 13 percent. The swing foretells a story of fossil fuels making a comeback, while the fight against climate change — and investment in wind and solar power — languishes.
In his only major energy policy speech ahead of the elections, Trump said that he would rescind “job-destroying” environmental regulations within 100 days of taking office and cancel the climate deal reached last year in Paris.
“A Trump administration will focus on real environmental challenges, not the phony ones we’ve been looking at,” Trump told supporters in May in North Dakota, the birthplace of the U.S. shale revolution.
To be sure, Trump has offered few clues on how he plans to implement his plans. Energy and climate policy has taken a back-seat to immigration, the economy and debate about the candidate’s fitness for office. And some of his proposals are contradictory, like his pledge to boost both natural gas and coal, two fuels that compete against each other in the power generation market.
It would be difficult but not impossible for Trump to pull out of the Paris energy policy accord. While the Senate never voted on the Paris deal, it’s part of the 1992 UN Framework Convention on Climate Change, which the U.S. ratified under Republican President George H.W. Bush. Trump would have to renounce the 1992 treaty and risk bringing down the entire UN process to scrap Paris. The U.S. would have to give three years’ notice to withdraw from Paris.
HEALTH CARE STOCKS
Investors are bracing for a rough day for some health care stocks after the Republican victories in Tuesday’s elections.
Mizuho Securities analyst Sheryl Skolnick says the Trump win and looming GOP control of Congress represent a worst-possible outcome for health care stocks. She says that a repeal of the Affordable Care Act, something Trump has promised, would take away the expansion in several states of the government’s Medicaid program for the poor, and that expansion helped both hospital and health insurance stocks.
Skolnick lowered her rating on several stocks, including the nation’s hospital chain HCA Inc. and the largest health insurer, UnitedHealth Group Inc., to “neutral” from “buy.”
Gold pulled back from its biggest jump since Britain’s Brexit vote as turmoil across financial markets eased following Trump’s victory.
Bullion earlier surged as much as 4.8 percent to $1,337.38 an ounce in London as investors sought haven assets, before paring gains as stock markets curbed losses. A rally in gold mining shares, which earlier jumped as much as 12 percent in South Africa, also abated.
Analysts had said that a Trump victory could cause tumult across markets, which had been banking on a continuation of current policies. His victory prompted traders to cut expectations that the Federal Reserve will raise interest rates in December. A Trump presidency could send bullion to $1,395, according to more than 20 analysts and traders surveyed by Bloomberg before the vote.
“We saw prices rally sharply in Asian trading when the news started to filter through, but we seem to have come to terms with the idea fairly quickly,” said Adrien Biondi, the global head of precious metals at Commerzbank AG in Luxembourg. “Trump already seems to have moderated his tone, but I still expect prices to rise as we get clarity on his policies.”
“In the medium-term, I am tempted to say very little will change,” said Stephen Macklow-Smith, who helps manage $2.2 billion of European equities for JPMorgan Asset Management in London. “People will go back to fundamentals: economic recovery is continuing around the world, and Trump will inherit the U.S. economy in pretty good shape. In the next three-to-six months, people will refocus on the recovery in economic growth and potential improvement in corporate earnings in Europe.”
The Associated Press and Bloomberg contributed to this report.