TSX craters on worries slump from virus won’t end soon

TORONTO Canada’s main stock index followed other North American markets sharply lower on Thursday, extending its losses amid concerns about how quickly the economy can rebound from the COVID-19 pandemic.

The S&P/TSX composite index closed down 650.41 points — more than four per cent — at 15,050.92 on Thursday after dropping 132.41 points on Wednesday.

American stock exchanges were hit even harder. In New York, the Dow Jones industrial average was down 6.9 per cent or 1,861.8 at 25,128.17.

The S&P 500 index plunged 5.9 per cent or 188.04 points at 3,002.10 and the Nasdaq composite fell 5.3 per cent or 527.62 points at 9,492.73.

Market observers say a rally in the markets since late March wasn’t justified given the dire state of the economy.

On Wednesday, the U.S. Federal Reserve warned the road to recovery from the worst downturn in decades would be a long one.

“The (Toronto Stock Exchange) market is taking it on the chin today. Yesterday wasn’t a particularly great day either,” said Les Stelmach, portfolio manager at Franklin Templeton Canada. “I think today it’s really a bit of an unwinding of some of that enthusiasm from (last) Friday and Monday that particularly for some of the energy stocks was off the charts in terms of positive movement in stock prices on really very little news.”

The energy sector led the Toronto market lower with a slide of almost 10 per cent.

The sell-off involved some of the country’s biggest oilsands producers, with Canadian Natural Resources Ltd. down 10.7 per cent, Suncor Energy Inc. off by 8.4 per cent and Cenovus Energy Inc. down 10.8 per cent.

The July crude oil contract was down US$3.26 at US$36.34 per barrel, while the July natural gas contract was up 3.3 cents at US$1.81 per MMBTU.

Other sectors also struggled in what turned out to be a widespread sell-off. Health care fell by 8.6 per cent and the metals and mining sector was down 8.4 per cent.

“It’s the level of uncertainty out there,” said Stelmach. “There are so many variables ...”