TORONTO — Canada's main stock index suffered its worst day in four-and-a-half years as it fell by triple digits for a third straight day amid growing concerns about the impact of the novel coronavirus outbreak.
The S&P/TSX composite index closed down 385.37 points or 2.2 per cent at 17,177.37, the largest single-day decrease since August 2015. It hit an intraday low of 17,124.86, slightly above where it started 2020.
"I think investors are just assessing what the economic implications are considering that it's spreading to other countries and especially when the CDC came out and talked about how the U.S. could get ready if the outbreak worsens in the United States," said Anish Chopra, managing director with Portfolio Management Corp.
The virus that originated in China has now infected more than 80,000 people and killed more than 2,500, mostly in China. However, the global coronavirus situation is changing with Italy, South Korea and Iran all seeing sudden spikes in the number of people infected with the virus.
That's ignited concerns that the economic hit in China will be repeated around the world if the virus spreads.
"If you had similar outbreaks in other countries or other continents those are the concerns that investors have — what's the impact to production, to supply chains, to the travel and tourism industry — lots of economic implications that investors are trying to assess," Chopra said in an interview.
In New York, the Dow Jones industrial average and S&P 500 fell Tuesday by more than three per cent for a second day in a row. The S&P hasn't done so since 2008.
The Dow lost 879.44 points at 27,081.36. The S&P 500 index was down 97.68 points at 3,128.21, while the Nasdaq composite was down 255.67 points at 8,965.61.
The U.S. stock markets have lost all their gains of the year and are down as much as 8.9 per cent off the record highs set over the past two weeks.
The TSX has lost 766.69 points or 4.3 per cent in the last three days and is 4.4 per cent below its record high of Feb. 20.
The coronavirus, called Covid-19, struck out of the blue and answered the question people were asking a couple of months ago about what could derail economic progress and the stock market run, said Chopra.
Investors are now assessing the situation daily.
"If they started cancelling major events or there were school closures, that would certainly have significant economic implications and that's something that could cause the market to fall even further."
But whether the correction could result in the end of the stock market bull run depends on the negative economic implications from the virus, said Chopra.
"If it's contained and the outbreaks are smaller than what people are anticipating it may be just a pause in the bull run. But if the coronavirus spreads, the outbreaks continue to get bigger, it could be the end of the bull run for awhile. We will get past this but it may take some time."
The Canadian dollar traded for 75.30 cents US compared with an average of 75.31 cents US on Monday.
The TSX sustained a bloodbath with all sectors falling.
Technology, consumer discretionary and health care led the decline but the key materials and energy sectors weren't far behind as they fell about 2.9 per cent.
Crescent Point Energy Corp. shares lost 6.4 per cent as crude oil prices dropped below US$50 per barrel.
The April crude contract was down US$1.53 at US$49.90 per barrel and the April natural gas contract was up 0.8 of a cent at US$1.85 per mmBTU.
Materials was pushed lower with First Quantum Minerals Ltd. down 5.3 per cent as the price of gold dropped for the first time after eight days of gains.
The April gold contract was down US$26.60 at US$1,650.00 an ounce and the March copper contract was up 0.1 of a cent at US$2.58 a pound.
The heavyweight financials sector was down 1.85 per cent despite BMO and the Bank of Nova Scotia announcing quarterly results that beat analyst expectations.
The sector fell as bond yields fell to a record low as investors looked for a safe place to hide.
"It looks like investors are moving more into bonds with the thought process being if economic activity is going to slow, interest rates are coming down."
This report by The Canadian Press was first published Feb. 25, 2020.
Companies in this story: (TSX:BMO, TSX:BNS, TSX:CPG, TSX:FM, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press