TORONTO (Reuters) - Investors in Canadian stocks on Tuesday cheered a resounding Liberal election victory that could loosen government purse strings to kickstart growth, as construction firms and railways rose with heavyweight resource and financial stocks.
The Liberals’ strong showing banished worries about a potential minority government. And while the new government plans to run deficits, it has also said it would keep corporate tax rates steady.
“People are breathing a sigh of relief and they are looking for those areas that should show a positive impact from what the Liberals were talking about,” said Irwin Michael, portfolio manager at ABC Funds.
During the campaign, Liberal leader Justin Trudeau pledged to run a C$10 billion ($7.7 billion) annual budget deficit for three years to invest in infrastructure and help stimulate Canada’s economy.
If the plan works “the industrial space could benefit, the consumer space will continue to benefit in my opinion,” said Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, Missouri.
The industrial group gained 2.6 percent, consumer discretionary names added 1.9 percent, and consumer staples rose 1.1 percent.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 83.54 points, or 0.61 percent, at 13,841.92.
Eight of the index’s 10 main groups rose, with financials up 1.9 percent and energy stocks jumping 2.6 percent even as the price of oil slipped slightly.
The two main railways also rose, with Canadian Pacific Railway (CP.TO) (CP.N) up 3.4 percent to C$196.72 after reporting profit that beat expectations on higher freight rates and lower operating costs.
Its rival, Canadian National Railway (CNR.TO), added 1.9 percent to C$78.59.
Healthcare stocks pulled back, weighed down by a 10.4 percent drop in Valeant Pharmaceuticals International Inc (VRX.TO) to C$190.85.
Progressive Waste Solutions BIN.TO was the second-biggest weight, plunging 14.6 percent to C$30.12 after the waste management company cut its earnings forecast.
Outside the main index, Canada’s nascent medical marijuana sector was higher. Trudeau has talked about legalizing and shares of some of the better-recognized companies surged after the Liberal sweep.
Editing by Chris Reese and Matthew Lewis