TORONTO – The Toronto stock market experienced a triple-digit drop Wednesday morning, as investors reacted to the NDP majority win in Alberta.
The S&P/TSX composite index was down 173.89 points at 15,000.05, at around 11 a.m.
“If you have a change in government, you could have a change in numerous policies towards the energy sector — how things get approved, exploration policies, production policies, energy policies,” said Colin Cieszynski, chief market strategist at CMC Markets Canada.
“All kinds of things could potentially change. It’s introduced an element of uncertainty after 44 years of Conservative rule where people had a pretty good idea of where they stood.”
The market’s energy sector was down just over two per cent, even as crude oil climbed higher, while the gold sector was down about 2.5 per cent as the price of the underlying commodity declined.
The NDP campaigned on a number of promises including corporate tax hikes and a review of the province’s royalty regime.
“The energy sector could potentially be forced to take on a higher tax burden,” Cieszynski said.
The Toronto stock market’s decline Wednesday morning follows a 193.53 point plunge on Tuesday.
In New York, the Dow Jones average was down 35.57 points at 17,892.63, the Nasdaq fell 6.34 points to 4,932.99 and the S&P500 was off 1.91 points at 2,087.55.
The loonie was up 0.69 of a U.S. cent at 83.53 cents, but Cieszynski said it is underperforming compared to the currencies of other oil-producing nations.
“The Canadian dollar is lagging behind some of the other oil currencies, on a day when oil is up pretty good,” he said.
The June crude oil contract was up $1.15 at US$61.55 and the June gold contract was down $4.10 at $1.189.10.
Cieszynski said the election results are likely to hang over the TSX for a couple of days.
“Usually with politics it’s fairly short-lived,” Cieszynski said. “The biggest hit will probably come through over say the next day or two, and then it should work its way through — until you actually see them come into power and enact policies. So the expectations get built in, and then things should stabilize after that and it will probably go back to trading off the oil price again.”