Stock markets plunge on fresh coronavirus angst
U.S. election uncertainty also seen as factor
• North American stock markets were on edge again Thursday, plunging amid new concerns about the spreading of novel coronavirus and uncertainty over the upcoming U. S. presidential election.
“There’s clearly still a lot of uneasiness happening in the broader marketplace,” said Mike Archibald, vice- president and portfolio manager with AGF Investments Inc.
California declared a state of emergency after a COVID-19 related death and the number of infections doubled overnight in New York. And then Sen. Elizabeth Warren dropped out of the race to become Democratic presidential nominee in an expected boost to rival Sen. Bernie Sanders.
The U. S. 10- year treasury yield dropped to a new low under the one- per- cent psychological level for investors.
“Until we can get back above one sustainably I think you’re going to see a lot of nervousness in this broader marketplace,” he said in an interview.
Investor unease has produced a preference for safety with dividend-paying stocks and low-beta stocks, government bonds, gold and defensive sectors such as utilities and REITS.
Telecommunications is typically among the defensive sectors that outperform others but the Canadian government’s move Thursday to force them to cut wireless rates by 25 per cent caused their shares to sink, including Rogers Communications Inc., which fell 2.4 per cent.
“We’re going to be in this period of volatility until we get a little bit more clarity on when are we going to get to peak virus and to be clear that’s not going to happen anytime soon in North America,” said Archibald.
The move by the U. S. and Canadian central banks to cut interest rates by half a percentage point this week temporarily dampened concerns but that was a one-day phenomenon, he said.
The S& P/ TSX composite index closed down 225.54 points or 1.3 per cent at 16,553.99.
In New York, the three major markets fell by more than three per cent. The Dow Jones industrial average was down 969.58 points or 3.65 per cent at 26,121.28. The S& P 500 index was down 106.18 points or 3.5 per cent at 3,023.94, while the Nasdaq composite was down 279.49 points or 3.1 per cent at 8,738.60.
Nine of the 11 sectors of the TSX were lower, led by consumer discretionar y, energy, health care and industrials.
Shares of Spin Master Corp. fell 39.3 per cent to push down the discretionary sector after the Toronto toymaker warned sales will fall this year due in part to supply chain and other disruptions resulting from the new coronavirus outbreak.
Energ y dropped with Husky Energy Inc. and Crescent Point Energy Corp. losing 6.3 per cent and 5.7 per cent, respectively, on weaker energy prices.
Crude oil prices fell ahead of OPEC announcing Friday whether it will cut output by 1.5 million barrels per day to offset the impact of the virus which is reducing crude demand.
T he April crude contract was down 88 cents at US$ 45.90 per barrel and the April natural gas contract was down 5.5 cents at US$1.77 per MMBTU.