Stock markets take a tumble amid fears of trade war,

As stock markets swung deep into the red Thursday before making a partial recovery, veteran analysts suggested it could be a while before investors see some stability — and not just because of the prospect of a reignited trade war between the U.S. and China. In Toronto, the TSX S&P Composite Index fell 245 points to close at 14,937 , a drop of 1.62 per cent. In New York, the Dow Jones industrial average plunged by 785 points before closing at 24,947, a drop of 79 points (0.32 per cent). In London, the FTSE was off by 217 points to close at 6704, a drop of more than 3 per cent for the U.K.’s key index.

Even the smallest bit of news — good or bad — will swing the markets when investors are as jittery as they are right now, said Craig Jerusalim, portfolio manager at CIBC Asset Management.

“It doesn’t take much for the market to react right now. People are hitting the sell button, and they’re hitting it indiscriminately,” Jerusalim said.

That type of speedy, emotional reaction, and quick, deep swing in prices, will be part of the stock market for a long time, Jerusalim believes.

“I don’t think this volatility will go away until there’s a bear market and an economic downturn,” Jerusalim said.

There are already some signs of that in Canada, argued David Prince, president of Harbinger Capital Markets.

“People didn’t really realize how bad the economy was, even though the signs were there. Then when the Bank of Canada spoke, the outlook wasn’t good,” Prince said.

This week, the Bank of Canada kept its key overnight lending rate at 1.75 per cent, citing among other factors the effect of lower oil prices on the Canadian economy.

That, in turn, has a knock-on effect on all kinds of investments, including stocks and bonds, Prince said.

The volatility in the market is exacerbated by the increasing use of artificial intelligence and price-triggered algorithms by large-volume traders, including companies running exchange traded funds, Prince said. If there’s a big drop, it goes even deeper when algorithms for the giant funds kick in, he said.

The market drops (and handful of rises) still need a spark to get them going. Jerusalim suggested that two main things kicked off this week’s swings: the arrest of the CFO of Chinese cellphone giant Huawei and OPEC’s removal from production of 1 million barrels a day.