Canada's main stock index sank 11% to a four-year low at the open on Monday, as oil prices tumbled and a second emergency rate cut by the U.S. Federal Reserve raised fears of a recession in the world's largest economy.
The TSX Composite Index reversed Friday’s quadruple-digit gains, and slumped 1,569.17 points, or 11.4%, to open Monday and a brand new week at 12,147.16.
The Canadian dollar removed 0.09 cents at 71.60 cents U.S.
Canada's financial regulator is reducing the amount of capital lenders must hold to guard against risks to the lowest level on record, it said on Friday, as part of a series of measures to help gird against the economic impact of the COVID-19 pandemic.
Parliament rushed through ratification of the new U.S.-Mexico-Canada trade pact on Friday before taking a three-week break to help stop the spread of the coronavirus.
Ontario, which has reported more than 100 new coronavirus cases, said on Saturday it would limit testing for the respiratory illness until it can guarantee a more steady supply of swabs.
RBC cut the rating Baytex Energy to sector perform from outperform. Baytex slid 10 cents, or 19.6%, to 41 cents.
RBC cut the rating on Birchcliff Energy to sector perform from outperform. Birchcliff withered 15 cents, or 16.5%, to 76 cents.
National Bank of Canada raised the rating on Kirkland Lake Gold to outperform from sector perform. Kirkland Lake Gold chucked $4.80, or 15%, to $27.14.
On the economic calendar, the Canadian Real Estate Association was set to report sales figures for February Monday.
ON BAYSTREET
The TSX Venture Exchange sank 28.5 points to 362.62.
All 12 TSX subgroups fell in the first hour, with health-care drooping 13.6%, energy down 12.6%, and communications off 12.1%.
ON WALLSTREET
Stocks fell sharply on Monday even after the Federal Reserve embarked on a massive monetary stimulus campaign to curb slower economic growth amid the coronavirus outbreak.
The Dow Jones Industrials tumbled 2,286.76 points, or 9.9%, to 20.898.86.
The broader S&P 500 erased 261.39 points, or 9.6%, to 2,449.23.
The NASDAQ slipped 726.59 points, or 9.4%, to 7,148.29
Apple shares plunged by more than 9%. Airline stocks also fell broadly. Delta and United traded at least 17% lower while American lost about 15%.
Bank stocks took a hit, with Bank of America and JPMorgan Chase each dropping more than 14%. Morgan Stanley fell 12.6% while Citigroup dropped 15.2%. The big banks announced Sunday they were halting their buyback programs in an effort to provide capital where needed.
Those losses put the major averages on track for their worst day since the “Black Monday” market crash of 1987. They also eclipsed the steep decline seen on Thursday.
Monday’s losses put the S&P 500 and NASDAQ more than 27% below their record highs set in late February. The Dow was 29% below its all-time high from last month.
Trading was halted for 15 minutes shortly after the open as a then 8.14% drop on the S&P 500 triggered a so-called circuit breaker. It was the third time in the last week the circuit breaker was triggered.
Before the open, futures contracts tied to the major averages hit their "limit down" levels, meaning they could not trade below that threshold. Those limits — along with the regular session’s circuit breakers — are imposed by the exchanges to maintain orderly market behavior.
The Fed cut interest rates down to basically zero, their lowest level since 2015. The U.S. central bank also launched a massive $700-billion quantitative easing program
While the central bank’s actions may help ease the functioning of markets, many investors said they would ultimately want to see coronavirus cases peaking and falling in the U.S. before it was safe to take on risk and buy equities again.
However, the weekend’s news about the coronavirus outbreak was not helping sentiment. U.S. cases have jumped to 3,774 and 69 deaths, according to Johns Hopkins University. The U.S. Centers for Disease Control and Prevention urged organizers to cancel or postpone events with at least 50 people.
Prices for the 10-Year U.S. Treasury soared, dropping yields to 0.81% from Friday’s 0.98%. Treasury prices and yields move in opposite directions.
Oil prices dumped $2.41 to $29.32 U.S. a barrel.
Gold prices thundered lower $49.20 to $1,467.50 U.S. an ounce.
