March 23, 2020 / 9:38 PM / 7 days ago

WRAPUP 1-Canada's TSX slumps to 8-year low, loonie falls as virus spreads

    * Canada's TSX closes down 5.3%
    * Loonie weakens 0.7% against the greenback
    * Canadian wholesale trade rises 1.8% in January
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, March 23 (Reuters) - Canada's main stock market
fell to an eight-year low on Monday and the Canadian dollar
weakened as economic uncertainty triggered by the spreading
coronavirus outbreak overshadowed policymaker efforts to ease
stress in the financial system.    
    The Toronto Stock Exchange's S&P/TSX composite index
          closed down 5.3% at 11,228.49, its lowest closing
level since October 2011. Since peaking in February, the index
has tumbled 37.5%.
    "Is this the bottom? No one knows," said Lorne Steinberg
Wealth Management Inc. "But every panic leads to a buying
opportunity. This time is no different and investors today will
be richly rewarded over the coming years."
    The heavily weighted financial services sector fell 7.9%,
while the utilities group was down 13.1%.
    The Federal Reserve took unprecedented steps to support U.S.
households and companies more directly with credit. The Bank of
Canada has also taken a series of steps to ease financial market
stress and has said that if necessary it can buy corporate and
municipal bonds to bolster liquidity.                         
    Still, the Bank of Canada's first operation under the
Bankers' Acceptance Purchase Facility (BAPF) showed dealers
bidding aggressively for funding, a sign that there is some way
to go before stress is reduced in Canadian money markets.
            
    A clearly unhappy Canadian Prime Minister Justin Trudeau
said people defying advice to isolate themselves to fight the 
coronavirus outbreak should "go home and stay home" or face
sanctions.             
    At 4:56 p.m. (2056 GMT), the Canadian dollar          was
trading 0.7% lower at 1.4521 to the greenback, or 68.87 U.S.
cents. The currency, which last Thursday hit a four-year low at
1.4669, traded in a range of 1.4337 to was 1.4560.       
    The price of oil       , one of Canada's major exports,
settled 3.2% higher at $23.36 a barrel. Oil has been pressured
in recent weeks by the demand destruction caused by the
coronavirus pandemic and a price war between producers Russia
and Saudi Arabia.             
    Canadian wholesale trade increased by 1.8% in January from
December on stronger sales in the motor vehicles and motor
vehicle parts and accessories subsector, Statistics Canada said.
Analysts had forecast a 0.2% decrease.             
    Canadian government bond yields fell across a flatter curve
in sympathy with U.S. Treasuries. The 10-year was down 4.6 basis
points at 0.818%.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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