CANADA STOCKS-TSX to fall on soft resources, election drama over

Tue May 3, 2011 8:34am EDT
 
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* Conservatives turn minority government into a majority

* Market relief at Tory win offset by commodity price fall

* Soft oil, copper prices may weigh

By Ka Yan Ng

TORONTO, May 3 (Reuters) - Toronto's main stock market looked set to open lower on softer commodity prices on Tuesday, although a crushing election victory by the ruling Conservatives removed a hurdle of uncertainty that has weighed on the market.

Canadian equity futures <0#SXF> suggested a soft open as commodity prices such as crude oil and copper were lower, a drag for the resource-heavy main index.

Still, investors were cheered by the Conservative win. The party, which has ruled as a minority government since 2006, now has a clear majority mandate to govern for four years. It is seen as a supportive outcome for Bay Street, and one that will likely see more business-friendly policies take effect.

For instance, the Conservatives have promised to cut the federal corporate tax rate to 15 percent in 2012 from 16.5 percent now, a policy that had been opposed by the opposition Liberals and New Democrats.

"By getting a clear majority in the Parliament, markets are able to handicap investment opportunities better," said Stephen Wood, chief investment strategist for North America at Russell Investments in New York, noting that energy shares will probably get a boost, as will tax-sensitive and interest-rate sensitive sectors.   Continued...