By Geoffrey Smith
Investing.com -- With the outcome of the U.S. election in the balance, the clearest losers in European markets on Wednesday are the clean energy companies that had hoped for a decisive Democrat victory that would have paved the way for an accelerated transition to renewables.
The big winners, meanwhile, appear to include pharma stocks, on the perception that a Congress set to remain split between the two main parties will be unable to enact any radical health reform that undercuts their pricing power.
By 5:50 AM ET (1050 GMT), the iShares Global Clean Energy ETF (NYSE:XLE), a rough proxy for the sector, was down 2.3%, having earlier lost as much as 3.5%. That it clawed back some of its losses was due to the first signs of late-counted votes skewing heavily toward the Democratic Party's candidate Joe Biden. The results from Milwaukee, a Democrat stronghold, erased a slim lead in the key swing state of Wisconsin that President Donald Trump had held after early counting. Similar developments are widely seen as possible in other undecided states, where the results of cities such as Philadelphia, Detroit and Atlanta have the potential to swing statewide counts in Pennsylvania, Michigan and Georgia.
Some of the biggest losers were wind turbine makers: Vestas Wind Systems AS (OTC:VWDRY) stock fell 6.8%, and Nordex (DE:NDXG) stock fell 8.2%, while Siemens Gamesa (OTC:GCTAY) fell 3.0%. Vestas had earlier reported record quarterly deliveries and upheld its guidance for the current year.
Operators of wind and solar farms, which had hoped for a significant expansion of their market opportunity in the U.S., also suffered, with Oersted (OTC:DOGEF) stock falling 3,0% and Iberdrola (OTC:IBDRY) stock falling 1.0%.
Iberdrola had only last week said its 81%-owned unit Avangrid (NYSE:AGR) would buy PNM Resources (NYSE:PNM) in a deal valued at $8.3 billion that would greatly expand its footprint in the U.S.
By contrast, pharma and health stocks started the session strongly before giving up some of their gains on the Milwaukee results.
Fresenius Medical Care (NYSE:FMS), whose biggest business is as operator of kidney dialysis clinics in the U.S., rose 5.7%, while pharma giants AstraZeneca (NYSE:AZN) and Sanofi (NASDAQ:SNY) saw their local stocks rise 4.7% and 3.6% respectively.
That is more a reflection of developments in the race for the Senate, where consensus expectations that the Democrats would overturn the Republican majority appear increasingly likely to be confounded.
With the GOP keeping control of the Senate and the Democrats keeping the House of Representatives, there is less chance of a radical reform of U.S. health care that would destroy the pricing power of the pharma and health sectors.