April 21, 2020 / 6:32 PM / 3 months ago

WRAPUP 2-Canadian stocks and dollar sink as oil crash rattles investors

 (New throughout, updates prices, market activity and investor
comments)
    * TSX closes down 3.1%, with financials down more than 4%
    * Loonie hits its weakest level since April 2 at 1.4263
    * Price of Brent crude oil plunges 24.4%
    * Canadian bond yields decline across a flatter curve

    By Fergal Smith
    TORONTO, April 21 (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)
  
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