COVID-19 fears roil North American stock markets, oil and loonie

TORONTO North American stock indexes plunged, crude oil prices tanked and the loonie fell to a five-year low as COVID-19 fears continued to rattle markets.

Equity, bond and currency markets collapsed from the start of trading after a European Central Bank governor suggested central banks were nearing the end of their support, said Erik Bregar, head of FX strategy at The Exchange Bank of Canada. “What we saw early this morning was a sort of let’s sell everything trade after one of the ECB governors admitted that central banking has basically reached its limit,” he said. Bregar said investors were spurred to get out of investments to raise cash.

“Some of these moves start to get a little disorderly because we’re literally going off the charts.”

The S&P/TSX composite index in Toronto closed down 963.79 points or 7.6 per cent at 11,721.42, following a temporary pause that happened earlier after market circuit breakers were tripped.

The TSX rebounded slightly from an intraday low that saw it lose 1,300 points and 10.2 per cent.

In New York, the Dow Jones industrial average closed down 1,388.46 points at 19,898.92. It partially recovered from being down 2,320 points to a level that wiped out all gains since Donald Trump was sworn in as U.S. president in January 2017.

The S&P 500 index was down 131.09 points at 2,398.10, and the Nasdaq composite fell 344.94 points to 6,989.84 as markets rallied at close.

“It feels like some invisible hand has just come in, in the last maybe hour or two and things have sort of calmed down a bit,” he said. “But I think everybody’s going to be laser focused on the bond markets now. They’ve been the safe haven up until now but now they are starting to crack too.” The panic selling struck all asset classes except the U.S. dollar.

The Canadian dollar lost 2.2 per cent, trading for US68.98 cents compared with an average of US70.55 cents on Tuesday.

The energy sector was down 12.5 per cent with Vermilion Energy Inc. shares losing 24.1 per cent. The May crude contract dropped to its lowest level since at least 2003 by falling US$6.50, or nearly 24 per cent, to US$20.83 per barrel.