May 3, 2011 / 12:37 PM / 8 years ago

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

* 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.

“The outcome of this election gives certainty for a policy continuity and it allows fundamentals to drive investments more.”

The main stock market traded cautiously in the final week of the election campaign with analysts attributing some of the retreat to wariness inspired by the surge of the left-leaning New Democratic Party in public opinion polls. [ID:nN29174448]

A shift in the political landscape did come to fruition as the NDP were installed as the official opposition party nationally for the first time ever, unseating the Liberals who moved to third place for the first time in its history. [ID:nN03272319]

“Despite the uncertainty, we didn’t see any dramatic selloffs so possibly there’s going to be a relief rally of sorts, but it’s going to muted by the fact that we didn’t have a steep selloff to begin with,” said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE finished Monday’s session down 10.28 points, or 0.07 percent at 13,934.51 after rising more than 1 percent to as high as 14,089.10, its strongest level since April 11.


* Suncor Energy Inc (SU.TO): The company’s first-quarter profit rose 32 percent, helped by higher oil sands production volumes and higher realized prices in upstream operations. [ID:nL3E7G312N]

* Agrium Inc AGU.TO: The leading Canadian farm dealer and fertilizer producer said on Monday that it had bought CerealToscana SA, a fertilizer distribution company in Italy. [ID:nN02252917]

* Onex Corp OCX.TO: The investment company and its affiliates said they will sell their Husky International business to private equity firms Berkshire Partners and Omers Private Equity for $2.1 billion. [ID:nL3E7G3236]

* WestJet Airlines Ltd (WJA.TO): Canada’s No. 2 carrier posted a manifold jump in its first-quarter profit helped by higher passenger traffic. [ID:nL3E7G321U]


Following is a summary of research actions on Canadian companies reported by Reuters. [RCH/CA]

* TransCanada (TRP.TO) price target raised to C$43 from C$42; rating buy at TD Newcrest

* Gammon Gold GAM.TO raised to sector performer from sector underperformer at CIBC (Additional reporting by Claire Sibonney in Toronto and Shrutee Sarkar in Bangalore; editing by Jeffrey Hodgson)

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