TORONTO (Reuters) - Canada’s main stock market index tumbled more than 3% on Tuesday and the loonie fell to a near three-week low against the U.S. dollar as plunging oil prices scared investors already worried about economic damage from the coronavirus pandemic.
The Toronto Stock Exchange’s S&P/TSX composite index closed down 3.1% at 13,940.06. Before the session’s setback, the index had rebounded nearly 30% from its March 23 trough.
“The future is still undefined, not clear and I think there is now a lot of money coming off the table, especially now with that great rebound and what is happening with oil,” said Paul de Sousa, SVP of Sightline Wealth Management.
Brent oil futures settled 24.4% lower at $19.33 a barrel as oil market panic extended into a second day, with no end in sight to a swelling global crude glut.
Oil is one of Canada’s major exports and the weighting of energy companies on the TSX is about 12%. The TSX’s energy group lost 1.2%, while the heavily-weighted financials group was down 4.1%.
Canadian retail sales were up 0.3% month-over-month in February, before social distancing measures began, Statistics Canada said.
“February feels like a lifetime ago” Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets, said in a note. “Expect a very different tone for retail sales over the next few reports.”
Canada’s inflation report for March is due on Wednesday, which could help guide expectations for additional easing measures from the Bank of Canada.
The central bank has slashed interest rates by 150 basis points since March and begun buying Canadian government bonds. Last week, it said it would broaden its asset-purchase program to include provincial and corporate debt.
The Canadian dollar was trading 0.3% lower at 1.4190 to the greenback, or 70.47 U.S. cents. The currency touched its weakest intraday level since April 2 at 1.4263.
“The CAD has taken a hit from the combined impact of weak crude prices and the push higher in the VIX index back above 40 over the past two sessions,” Shaun Osborne, chief FX strategist at Scotiabank, said in a note.
The VIX index is a measure of expected stock market volatility. It rose 3.6% to 45.41 as Wall Street fell for a second straight day on Tuesday.
Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year was down 5 basis points at 0.578%.
Reporting by Fergal Smith; editing by Jonathan Oatis, Nick Zieminski and David Gregorio