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Canada Elects New Liberal Majority Government – Markets Respond

On October 19th, 2015, Canadians went to the polls in a national election and ousted the longtime Conservative government for the more left leaning Liberal party. There have been some concerns, particularly in oil-rich Alberta, that a change in government would spell further decline in the energy sector. Prior to the change in government the Canadian economy sank into a recession and stock markets have been volatile largely based on reduction of world energy demand (and the Canadian economy largely being reliant on the commodity sector.)

Stock markets hate uncertainty and uncertainty creates price volatility. Therefore the fact that Canada has a new majority government is positive for the stock market. Any changes that the new government wants to implement will take time.

The 2 platform promises that will affect the most Canadians are the decrease in the middle tax bracket from 22% to 20.5% and the reduction in the TFSA limit from $10,000 to $5,500. It is my responsibility to guide you through those probable future changes in the most productive manner possible. I think that it would be a good idea to take advantage of the higher TFSA limit for the rest of the year.

Foreign policy may also play a roll in adding to stability, the new government has signalled that their goal is to improve relations with the rest of the world. That goal will have a good influence on both the stock market and Canada’s economy.

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