After spending most of the day in positive territory, the Toronto Stock Exchange and the Dow Jones Industrial Average plunged into the red at the close of trading on Friday, capping a bleak week for stock markets.
The Toronto Stock Exchange closed down 318 points or almost three per cent, while the Dow finished down more than 900 points or 4.5 per cent.
Both spent much of the day in positive territory before giving into pessimism in the last hour or two of trading. The Dow has lost another 17 per cent of its value this week, and that comes after the stock grouping had already lost ground in three of the previous four weeks of trading.
Volatility has been the name of the game of late, as investors panic with each new bleak piece of information about the coronavirus, and then bargain hunters buy in as central banks and governments announce massive spending packages to try to curb the pandemic’s economic impact.
A catalyst for the selling in New York seems to have been the move by the state government to mandate nearly all workers to stay home if they can do so, to limit the spread of the coronavirus. The announcement by Gov. Andrew Cuomo “spooked people; it spooked the market,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “It’s all fear, fear of more negative headlines.”
New York’s move comes a day after California put its residents on a similar order. The two decisions mean almost 60 million Americans will be largely housebound for the foreseeable future, which underlines just how serious the economic consequences of the coronavirus that causes COVID-19 are.
“We just don’t know what the next two weeks will bring,” said Paul Christopher, global market strategist at the Wells Fargo Investment Institute. “Are we going to follow the same infection curve as other countries, and the number infections will drastically accelerate? That’s when the storm is going to come.”
Oil sold off sharply, with the price of the U.S. benchmark West Texas Intermediate falling another 21 per cent to trade below $20 US a barrel for the first time since 2002. That pushed the loonie down below the 70-cent US level.
“With Canada being a net oil exporter, its economy is now facing a double whammy of the COVID-19 related slowdown and an oil price shock,” TD Bank economist Omar Abdelrahman said.