Briefing highlights
- How markets could look Wednesday morning
- JPMorgan's loonie, oil, gold, copper scenarios
- Valeant shares tumble after earnings report
- Canada slips in OPEC oil supply ranking
- M&S to pull out of 10 markets
6.5 cents
Difference in loonie’s value depending on who wins presidency: JPMorgan Chase
The market scenarios for Wednesday morning are extreme, to say the least.
It’s generally accepted that a Trump victory in the presidential election will roil financial markets across the globe, bloodying stocks and currencies like the Canadian dollar and Mexican peso.
Just the opposite is seen under a Clinton win in what has been a historic election campaign that will, either way, have a historic result.
“Hopefully, Tuesday will conclude the most-watched race between the two least-liked candidates in modern presidential history,” said John Normand, the head of foreign exchange, commodities and international rates research at JPMorgan Chase.
“We say ‘hopefully’ because the race remains close, thus risking a contested election like Bush-Gore in 2000.”
Much has been said and written about the potential market impact depending on who wins. But here’s how JPMorgan Chase sees it playing out in the day, week, month and quarter after the election, assuming a Republican House and Democratic Senate:
While Ms. Clinton represents the status quo, Donald Trump represents the potentially wild unknown, which is why many commentaries have focused on how markets would behave should he win the presidency.
Last week, for example, Bank of Nova Scotia strategists Shaun Osborne and Eric Theoret cited the “Sell North America” sentiment in currency markets when Ms. Clinton was fading and Mr. Trump pulling up from behind.
If Mr. Trump were to win, that theme would re-emerge Wednesday morning, Mr. Theoret said this week.
For currency markets, a Trump victory would mean that the U.S. Federal Reserve would not raise interest rates in December, as expected, because of the uncertainty and market turbulence sparked by the rise of the Republican candidate.
That would be negative for the U.S. dollar against major currencies like the yen, the euro and the pound, but would also mean softness for those such as the loonie and peso, Mr. Theoret said.
“A Trump win would be devastating for the Mexican peso, and would hit the Canadian dollar badly, too,” added Alvin Tan of Société Générale.
There’s also the possibility of a close race that doesn’t end things by Wednesday morning.
“The tightening of the presidential race means that the likelihood of a near-tied election result is now a real possibility, which could be aggressively disputed by one or both of the candidates,” said Paul Ashworth of Capital Economics.
“It’s possible that control of the next Senate will come down to the wire, too,” he added.
“In the event of a very narrow Clinton win, it is all but guaranteed that Trump would claim the election had been ‘rigged’ and would challenge the result via the courts. Civil disorder is also possible. Under those circumstances, the infamous 2000 election suggests that the uncertainty could persist for at least a month and could weigh heavily on the stock market during that time.”
Valeant sinks
Shares of troubled Valeant Pharmaceuticals International Inc. are falling sharply after it posted a big quarterly loss and cut its forecast for the year.
The company posted a loss attributable to Valeant of $1.2-billion (U.S.), or $3.49 a share, compared to a profit of $49.5-million or 14 cents a year earlier. Adjusted earnings per share tumbled to $1.55 from $2.41.
Revenue slipped to $2.5-billion from $2.8-billion.
Valeant also cut its 2016 forecasts, now projecting adjusted earnings per share of between $5.30 and $5.50, compared to its earlier projection of $6.60 to $7.
It also trimmed its revenue expectations to between $9.55-billion and $9.65-billion from an earlier $9.9-billion to $10.1-billion.
Canadian oil ranking slips
Canada has been slipping in OPEC’s oil supply rankings.
In its latest monthly oil market report, the Organization of the Petroleum Exporting Countries said Canada is expected to be the third-largest non-OPEC source of the increase in supplies next year, ranking behind Brazil and Kazakhstan.
It said the same thing one month ago, though in the two monthly reports that preceded that, Canada had been expected to rank No. 2 behind Brazil.
Mexico, the U.S., China, Columbia and Azerbaijan are expected to be the primary countries pulling back, according to the latest report.
“The main risk factors, such as geopolitical tensions in some oil-producing territories, technical developments, bottlenecks and, most importantly, oil price levels will continue to have an impact on supply growth expectations,” OPEC said.
M&S to close stores
One of the world’s best-known retailers is pulling back and hunkering down.
Britain’s Marks and Spencer Group PLC plans to pull out of 10 markets by shuttering 53 shops in China, France, Belgium, Estonia, Hungary , Lithuania, the Netherlands, Poland, Romania and Slovakia.
That will affect about 2,100 employees.
“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” chief executive officer Steve Rowe said in a statement.