North American stock markets fell in the middle of the week on worrisome new signs of the weakened economy.
After rallying hope on Tuesday that the spread of the COVID-19 pandemic will be contained, market sentiment has turned as economic and corporate benefits have revealed the extent of the damage from the virus, Candice said. Bangsund, portfolio manager for Fiera Capital.
“Our feeling is that the markets were vulnerable to disappointing news and a potential downturn after such a sharp rise last month as risks continue to prevail,” she said in an interview.
Retail sales in the United States fell 8.7% last month, as generalized orders for home stays began to bite a key driver of the US economy. An investigation into the trading conditions of manufacturers in New York State also plunged to an all-time low and industrial production across the country also failed to meet low expectations from economists.
The Canadian economy contracted 9% in March, the sharpest drop in nearly 60 years since Statistics Canada kept this data.
In addition to that, other US banks said they had set aside billions of dollars for an avalanche of expected defaults.
“As it continues to spread and the economies remain frozen, our feeling is that investors will remain accountable for virus-related headlines and subject to more periodic bouts of volatility in the short term,” said Bangsund.
The S & P / TSX composite index closed down 299.85 points to 13,958.58, partially recovering from an intraday trough of 13,900.66.
In New York, the Dow Jones industrial average is down 445.41 points to 23,504.35. The S&P 500 lost 62.70 points to 2,783.36, while the Nasdaq composite lost 122.56 points to 8,393.18.
The Canadian dollar traded at 70.99 cents US, compared to an average of 71.92 cents US on Tuesday.
The Toronto main index was hampered by a widespread decline, with 10 of the top 11 sectors falling. The only exception was consumer staples, which increased, while Alimentation Couche-Tard Inc. increased 4.5%.
Energy led the way down, losing 5.3% as crude oil prices hit a new low in 18 years. This resulted in a decline in the shares of Secure Energy Services Inc., Enerflex Ltd. and Vermilion Energy Inc., respectively 18.3, 15.7 and 15.6%.
The May crude contract fell 24 cents to US $ 19.87 per barrel and the May natural gas contract fell 5.2 cents to almost US $ 1.60 per mmBTU.
Energy markets have been hit by the International Energy Agency, warning that OPEC agreement to limit production will not be enough to offset record levels and the destruction of demand linked to viruses .
And then the United States announced a record increase in crude oil inventories last week. They rose 19 million barrels to 503.6 million barrels.
The heavyweight financial sector lost more than 3%, with large Canadian banks losing between 2.4 and 5%.
Materials also fell, as the price of gold fell for the first time in five days after peaking in seven years. The shares of Ivanhoe Mines Ltd. fell 12.2%.
The June gold contract fell US $ 28.70 to US $ 1,740.20 an ounce and the May copper contract fell 3.35 cents to almost US $ 2.30 a pound.
Bangsund said the market downturn came amidst lingering questions about the length of the downturn.
“I think it’s a healthy downturn in a market that may have gone too far, too fast given the level of uncertainty and the lack of visibility,” she said.
In addition to not having a firm date for the reopening of the economy, it is unclear whether the recovery will be staggered.
“We actually think there is a good chance that the markets may revisit the March lows before a more sustainable bull market ensues. “
This report from The Canadian Press was first published on April 15, 2020.