Alberta’s orange wave triggers TSX drop in early trading Wednesday
Posted May 6, 2015 9:03 am.
This article is more than 5 years old.
As Alberta woke up to an NDP province, energy stocks lead a triple-digit drop to begin Toronto stock trading Wednesday.
Just after the opening bell, the S&P/TSX composite index dropped 201 points to 14,009.73, after falling nearly 200 points on Tuesday.
Benjamin Tal, Deputy Chief Economist with CIBC World Markets Inc., told 660News the swing in the market is a definite reaction to the surprising demise of the Progressive Conservatives to third party status.
“The key issue, of course, is not taxes but rather royalties,” Tal said.
NDP leader Rachel Notley campaigned on a platform that included an energy royalty review and a corporate tax hike of two points to 12 per cent.
Tal said the consensus in the market at this point is that the NDP will likely end up increasing royalties.
“The oil lobby will be working overtime now to try to convince the NDP government that is not the right way to go, especially in an environment in which oil prices have been going down and the oil sector is struggling.”
Tal said there will be a lot of pressure on the government going forward.
He said he believes the early drop in the markets is a result of overshooting and the energy sector will realize a royalties hike is not a sure thing.
