Canada's main stock index fell on Monday in line with Wall Street, as escalating tensions between the United States and China regarding the origin of the novel coronavirus fueled fears of a new trade war.
The S&P/TSX Composite Index slumped 38.19 points to reach noon at 14,582.15.
The Canadian dollar moved higher 0.17 cents to 70.96 cents U.S.
U.S. Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the new coronavirus emerged from a Chinese laboratory, but did not dispute U.S. intelligence agencies' conclusion that it was not man-made.
The largest percentage gainers on the TSX were NovaGold Resources, which jumped 18 cents, or 1.1%, to $16.15, and Wesdome Gold Mines that gained 15 cents, or 1.4%, to $10.90, after gold prices rose as the Sino-U.S. tensions pushed investors to safe havens.
Chorus Aviation fell 35 cents, or 10.3%, the most on the TSX, to $3.05. The second-biggest decliner was Air Canada, down $1.61, or 3.8%, to $17.69, after it posted a bigger-than-expected quarterly loss and warned of an about 75% drop in third-quarter capacity due to the COVID-19 pandemic.
ON BAYSTREET
The TSX Venture Exchange gained 3.03 points to 476.12.
Eight of the 12 TSX subgroups were negative midday, with real-estate stocks fading 2.1%, energy, sliding 2%, and consumer discretionary stocks off 1.6%,
The four gainers were led by information technology, up 2.6%, gold, ahead 1.7%, and materials, up 0.8%.
ON WALLSTREET
Stocks fell on Monday as traders weighed the reopening of the economy along with brewing tensions between China and the U.S.
The Dow Jones Industrial Average remained behind 190.64 points to 23,533.05.
The S&P 500 doffed 8.33 points to 2,822.38.
The NASDAQ Composite was stronger 53.9 points to 8,658.85, lifted by big technology shares. Microsoft, Amazon and Netflix all rose more than 1%, capping losses in the broader market.
Airline shares were among the biggest losers in the S&P 500, with Delta, United, American Airlines all dropping more than 10%. The declines came after Warren Buffett said over the weekend his Berkshire Hathaway sold all of its airline holdings because of the coronavirus outbreak. Plane maker Boeing also fell nearly 3%.
While Buffett was optimistic over the long term about the outlook for America, the move shows his concern that the pandemic has changed certain industries permanently and could be a sign that other investors are too optimistic about the economy returning to normal quickly.
Berkshire had more than $4 billion invested across United, American, Southwest, and Delta Airlines before the sale. Buffett noted his admiration for the industry but added there are events “on the lower levels of probabilities” that call for a change of plans.
Monday’s drop pushed American, United and Delta’s 2020 losses to more than 60%, while Southwest has lost half of its value this year.
Berkshire also reported a record $137 billion in cash after the first quarter, but Buffett said he doesn’t “see anything that attractive” to deploy that money. Shares of Berkshire fell 2.8% on Monday.
Increasing hopes of a possible treatment from Gilead Sciences also lifted sentiment last month. On Sunday, CEO Daniel O’Day said remdesivir — Gilead’s promising antiviral drug — will be available to coronavirus patients this week.
Disney fell more than 3% following a downgrade at MoffettNathanson. The firm said the economic hit to the entertainment giant will last longer than expected, with theme parks in particular facing a multi-year recovery.
Investors are also grappling with worries over another spat between China and the U.S. On Sunday, Secretary of State Mike Pompeo said there was a “significant amount of evidence” connecting the coronavirus to a lab in the Wuhan region of China.
States across the U.S. are letting nonessential businesses reopen and are easing stay-at-home orders in an effort to restart the economy after the coronavirus forced a near-global halt in economic activity.
However, this easing comes as data from the World Health Organization showed the U.S. had its deadliest 24 hours of the outbreak between Thursday and Friday.
Prices for the 10-Year Treasury gained ground, lowering yields to Friday’s 0.63%. Treasury prices and yields move in opposite directions.
Oil prices nicked ahead 11 cents to $19.89 U.S. a barrel.
Gold prices grew by $12.29 to $1,713.20 U.S. an ounce.
