Toronto stock futures, dollar dip as Trudeau calls snap election

Canada's main stock index futures and the Canadian dollar slipped on Monday

  

Canada's main stock index futures and the Canadian dollar slipped on Monday after Prime Minister Justin Trudeau called an early election for Sept. 20 as widely expected.

In calling for the snap election on Sunday, Trudeau said he needed a new mandate to ensure voters approved of his Liberal government's plan to recover from the pandemic. 

September futures on the S&P/TSX index slipped 0.4% by 7:35 a.m. ET, while the Canadian dollar  traded down at 1.25510 to the greenback.

"Usually, elections in Canada only cause a brief blip on the market but until they are over, investors might nonetheless approach CAD with more caution," Commerzbank analysts wrote in a note.

Some analysts said the Canadian dollar was also tracking weakness in G10 currencies on the back of disappointing monthly activity data from China. The data dented demand for risky equities globally, with the S&P 500 futures EScv1 down 0.3%. 

With polls showing the governing Liberal Party well ahead of the official opposition, investors have been looking for signs Canada's next government could reduce historic levels of fiscal spending to support the economy during the pandemic, with activity already on track to make a full recovery. 

Bets of a steady economic rebound have propelled the Toronto Stock Exchange's S&P/TSX composite index to record highs in the past few weeks, led by the energy .SPTTEN and financial sectors, which have gained more than 25% so far this year.

The S&P/TSX index ended little changed on Friday, but still logged its fourth straight week of gains.

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($1=C$0.7967)

(Reporting by Sagarika Jaisinghani and Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila) ((sagarika.jaisinghani@thomsonreuters.com))


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