(The Canadian Press)

(The Canadian Press)

Canada’s main stock index hits 52-week low amid COVID-19 worries, drop in crude oil prices

In New York, the Dow Jones industrial average had its worst day since 1987

Canada’s main stock index hit a 52-week low Monday amid heightened volatility caused by a steep drop in crude oil prices and investor angst over the spread of COVID-19.

The amount of market volatility is unprecedented, says Michael Currie, vice-president and investment adviser at TD Wealth.

“Thousand-point moves are just becoming the norm now,” he said in an interview. ”A 500-, 600-point move nobody even flinches anymore and those used to be massive days.

Trading on the S&P/TSX composite index was temporarily halted for the third time in the past week after an early 11 per cent drop or more than 1,800 points triggered a circuit-breaker.

It partially recovered to close down almost 10 per cent or 1,355.93 points at 12,360.40.

In New York, the Dow Jones industrial average had its worst day since 1987 by losing 2,997.10 points or 12.9 per cent at 20,188.52. The S&P 500 index was down 324.89 points at 2,386.13, while the Nasdaq composite was down 970.28 points at 6,904.59.

The markets fell despite the Federal Reserve over the weekend joining the Bank of Canada in again cutting interest rates, which should have been supportive.

“This is still a market that is pricing in not just a garden variety recession but the possibility of something worse,” said Frances Donald, global chief economist and head of macro strategy for Manulife Investment Management.

That could include protracted weak economic activity that looks like a credit crisis if defaults start to rise.

“We have so little visibility into what the economy will look like next and let’s remember the stock market is trying to get a sense of what earnings will look like,” she said in an interview.

The shape of earnings won’t be known until novel coronavirus cases start to slow.

READ MORE: Canada to close borders to foreigners, but keeps U.S. border open to slow spread of COVID-19

In the meantime, the TSX is down about 31 per cent from its Feb. 20 high while the S&P 500 is down 30 per cent and the Dow nearly 32 per cent.

The Canadian dollar traded for 71.61 cents US compared with an average of 71.94 cents US on Friday.

The loonie fell to a four-year low as investors increasingly seek shelter in the U.S. dollar and the Japanese yen. They’re concerned about the economic impact of COVID-19, policy responses in Western Europe and the spread of events, restaurants and stores shutting down in North America, said Tom Nakamura, vice-president and portfolio manager, currency strategy at AGF Investments Inc.

“There’s also market concern about the Canadian economy and whether we have enough policy tools and we have enough fiscal space to be able to combat these kind of dual shocks to our system,” he said.

He added that the Canadian dollar could still shed some more value until there’s signs that the virus cases have peaked.

Materials was the lone of the TSX’s 11 major sectors to gain ground in a broad-based selloff. The sector was up 2.3 per cent as Alamos Gold Inc. gained 20.8 per cent and Kinross Gold was up 17.3 per cent, despite another drop in gold prices.

The April gold contract was down US$30.20 at US$1,486.50 an ounce and the May copper contract was down 7.15 cents at US$2.39 a pound. Silver prices hit their lowest level in a decade.

Gold is traditionally seen as a safe haven but it fell as investors faced forced liquidations, short coverings or looked for anything in their portfolios with a profit to sell and raise cash.

“Gold is doing badly because it’s done so well,” Currie said.

Energy was the big loser. The key sector lost more than 18 per cent as crude oil prices dropped to their lowest level in four years. Canadian Natural Resources was down 27.2 per cent.

The April crude contract was down US$3.03 at US$28.70 per barrel and the April natural gas contract was down 5.4 cents at US$1.815 per mmBTU.

Crude is dropping on reducing demand as businesses close and travel is brought almost to a standstill, while supply is potentially increasing because of a price war between Saudi Arabia and Russia.

“So just about everything that could go wrong with energy right now is,” said Currie, adding the only bright spot was the U.S. saying it will top up its strategic oil reserves.

The heavyweight financials sector lost more than 10 per cent with Manulife Financial down 17.9 per cent and National Bank of Canada 16.8 per cent lower.

Other companies getting hit were mall food court operator MTY Group Inc. down 36.3 per cent and BlackBerry Inc. shares dropping nearly 21 per cent.

Air Canada dropped more than 28 per cent amid a dramatic cut in its capacity as the federal government closed the border to most visitors.

Ross Marowits, The Canadian Press


Like us on Facebook and follow us on Twitter.

Coronaviruseconomy

Just Posted

One of the tiny western toads during the 2019 migration. (Langley Advance Times files)
Environmentalists prep for annual Langley toad migration

South Langley will soon have tens of thousands of toads on the move

Blading for bees, led by Aldergrove resident Zach Choboter, headed through B.C. (Special to The Star)
Aldergrove’s bee blader crosses the prairies

Zach Choboter has rollerbladed from Whistler to Alberta in two weeks

Tourism Langley has put together Father’s Day gift boxes that support local businesses and aid the Langley Food Bank. (Special to Langley Advance Times)
This Father’s Day, you can support Langley businesses and aid the Food Bank

Tourism Langley brings back their popular gift boxes

Marsha Miller walked through the Derek Doubleday Arboretum Friday afternoon, reading the info stations about residential schools and their impact on Indigenous Canadians. (Matthew Claxton/Langley Advance Times)
Langley vigil for residential school victims brings forth powerful emotions

Tears from visitors even before evening event, organizer said

Trinity Western University held a vigil Tuesday as well as having two more on Thursday, June 10 to honour the 215 children whose remains were buried at a residential school in Kamloops. Their remains were found with ground-penetrating radar. (TWU/Special to the Langley Advance Times)
Langley university vigils honour the 215 children buried at Kamloops residential school

Indigenous leader offers suggestions on how to process the devastating information and on healing

t
How to tell if a call from ‘CRA’ is legitimate or a scam

Expert says it’s important to verify you really are dealing with the CRA before you give out any info

The rainbow flag flies beside the Canadian flag outside the University of the Fraser Valley’s Chilliwack campus on June 26, 2020. Monday, June 14, 2021 is Flag Day, and also June is Pride Month. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of June 13 to 19

Flag Day, Garbage Man Day, International Panic Day all coming up this week

British Columbia-Yukon Community News Association’s 2021 Ma Murray Awards were handed out during a virtual ceremony on Friday, June 10. (Screen grab)
Black Press Media winners take gold at B.C. and Yukon journalism awards

Publications received nods in dozens of categories

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Prime Minister Justin Trudeau greets campers while visiting McDougall, Ont. on Thursday, July 19, 2018. THE CANADIAN PRESS/Frank Gunn
71% of B.C. men say they’d prefer to go camping with Trudeau: survey

Most British Columbians with plans to go camping outdoors say they’d prefer to go with Trudeau or Shania Twain

Members of the Department of Fisheries and Oceans’ Marine Mammal Response Program rescued an adult humpback what that was entangled in commercial fishing gear in the waters off of Entrance Island on Thursday, June 10. (Photo courtesy Marine Mammal Response Program)
Rescuers free humpback ‘anchored’ down by prawn traps off Vancouver Island

Department of Fisheries and Oceans responders spend hours untangling whale

Chilliwack cocaine trafficker Clayton Eheler seen with a tiger somewhere in Asia in 2014. Eheler was sentenced to nine years jail in 2018, but was released on bail in October 2020 pending his appeal of conviction.(Facebook)
Director of civil forfeiture seeks $140,000 from Fraser Valley drug dealer’s father-in-law

Clayton Eheler’s father-in-law Ray Morrissey caught with money in Fort St. John by B.C.’s gang unit

A Comox Valley shellfish operator pleaded guilty and was fined $10,000 in provincial court in Courtenay earlier this year. Record file photo
B.C. clam harvester fined $10,000 for Fisheries Act violations

Charges against three others were stayed in Courtenay Provincial Court

Frank Phillips receives a visit from his wife Rena at Nanaimo Seniors Village on their 61st wedding anniversary, March 31, 2020. Social visits have been allowed since COVID-19 vaccination has been offered in all care homes. (Nanaimo News Bulletin)
B.C. prepares mandatory vaccination for senior care homes

180 more cases of COVID-19 in B.C. Friday, one more death

Most Read