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Equities

Canada’s main stock index plunged more than 1,000 points at the opening bell Thursday as world markets sank after U.S. President Donald Trump imposed restrictions on travel from Europe as part of a move to combat the spread of the novel coronavirus. Major U.S. markets also started deep in the red, with the S&P 500 and Nasdaq joining the Dow in bear market territory.

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At 9:53 a.m. ET (1353 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 1,572.02 points, or 11.02 per cent, at 12,698.07.

All 230 stocks on the exchange were lower. Energy stocks sank more than 12 per cent as crude prices continued to drop. Financials were down 9.4 per cent while the materials sector lost 134.1 per cent.

In the U.S., the Dow Jones Industrial Average fell 1,368.51 points, or 5.81 per cent, at the open to 22,184.71.

The S&P 500 opened lower by 110.52 points, or 4.03 per cent, at 2,630.86. The Nasdaq Composite dropped 553.47 points, or 6.96 per cent, to 7,398.58 at the opening bell. Both the S&P and Nasdaq are now 20 per cent below their February peaks, signalling a move into a bear market. The Dow crossed that line on Wednesday.

The losses came after Mr. Trump announced that travel from Europe would be suspended for 30 days as part of a government effort to slow the spread of the virus. The United Kingdom was made exempt from the ban, which the U.S. President also said wouldn’t affect trade. He said there would be exemptions for “Americans who have undergone appropriate screenings.” As well, Mr. Trump announced other measures, including instructing the Treasury Department to defer tax payments for entities hit by the virus.

However, Mr. Trump’s remarks were quickly overtaken by other headlines, including a decision by the NBA to suspend its season after a player tested positive for the virus and news that actors Tom Hanks and Rita Wilson had also tested positive for the coronavirus.

"Trump managed to spook an already spooked market,' Jasper Lawler, head of research with London Capital Group, said in an early note.

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“The biggest source of disappointment on Wall Street was the lack of specific ways to support people and (small to mid-size enterprises) of the sort that were announced in the U.K. budget. Paid sick leave, free testing and a solution for uninsured Americans were all missing,” Mr. Lawler said.

Travel stocks were already feeling the pain of the travel ban in the premarket. American Airlines Group Inc. stock was down more than 13 per cent ahead of the North American open. Delta Air Lines Inc. shares lost more than 10 per cent. United Airlines Holdings Inc. was also down nearly 11 per cent. In Europe, shares of Air France-KLM, Lufthansa and IAG, which owns British Airways, were all down.

Carnival Corp. shares sank 19 per cent in premarket trading after the company said it will suspend Princess Cruises global operations for two months. It said the move was out of an abundance of caution. The company has been hit with several high-profile cases of passengers contracting the virus.

Overseas, major European markets remained deep in the red by afternoon. The pan-European STOXX 600 was down 8 per cent after the European Central Bank approved fresh stimulus but kept rates unchanged. The ECB said it would offer fresh loans to banks, offer previously agreed liquidity facilities at even more favourable rates and it would temporarily increase assets purchases to help the economy cope, according to Reuters.

Britain’s FTSE 100 fell nearly 7 per cent. Germany’s DAX lost 7.42 per cent. France’s CAC 40 dropped 8.11 per cent.

In Asia, Japan’s Nikkei finished down 4.41 per cent. The Shanghai Composite Index ended down 1.52 per cent and Hong Kong’s Hang Seng lost 3.66 per cent.

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On the corporate side, Bombardier Inc. announced late Wednesday that Alain Bellemare is out as the chief executive is exiting as chief executive officer. He will be replaced effective April 6 by Hydro-Québec CEO Éric Martel. Bombardier said its board unanimously concluded that it was the appropriate time for a new leader to take the helm.

Commodities

Crude prices sold off early Thursday as the U.S. ban on travel from Europe and a proclamation from the World Health Organization declaring the coronavirus crisis a pandemic added further pressure to an already volatile market.

The day range on Brent so far is US$33.30 to US$36.46. The range on West Texas Intermediate is US$30.68 to US$33.63.

Both benchmarks fell as much as 5 per cent in the predawn hours. Both are now down roughly 50 per cent from highs seen in the first month of the year.

The U.S. travel ban is seen as hitting an already struggling airline industry hard and further reducing the demand for fuel.

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The ban comes as Saudi Arabia and Russia engage in a standoff that has sideswiped prices after Moscow refused to agree to deeper production cuts by OPEC and its allies, causing the pact to fall apart.

“If this doesn’t get Saudi and Russia back to the table, I don’t think anything will,” AxiCorp strategist Stephen Innes said. "But in the meantime, with jet fuel demand about to fall off a cliff edge, the trend is...sell, sell, selll."

On Wednesday, the United Arab Eremites joined Saudi Arabia in announcing plans to boost output after the failure of the OPEC+ meeting last week.

UAE’s national oil company, ADNOC, said it expects to raise crude sales to more than 4 million barrels per day and accelerate a push to boost capacity by a quarter to 5 million barrels per day.

“Without OPEC+, the global oil market has lost its regulator and now only market mechanisms can dictate the balance between supply and demand,” Espen Erlingsen, head of upstream research at Rystad Energy.

Gold prices, meanwhile, gained as worries about the spread of the virus roiled the broader market.

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Spot gold rose 0.5 per cent to US$1,642.46 per ounce. U.S. gold futures were unchanged at US$1,642.20.

Currencies

The Canadian dollar fell below the mid-72-US-cent mark, pressured by falling crude prices and economic headwinds.

The day range on the loonie so far is 72.19 US cents to 72.71 US cents. The low end of that spread represents the weakest intraday level for the Canadian dollar since February 2016.

“The market shrugged off [Prime Minister Justin] Trudeau’s $1-billion fiscal package to combat the coronavirus, as it is a meagre 0.04 per cent of GDP,” Elsa Lignos, global head of FX strategy for RBC, said.

"As a comparison, the package announced by the U.K. government is £30-billion, or 1.3 per cent of GDP."

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She noted the federal government also announced that the next budget will be delivered March 30 “so the market will be watching to see if it contains any additional measures.”

There were no major Canadian economic reports due Thursday to offer further direction for the loonie.

So far in March, the Canadian dollar is one of the biggest losers against the U.S. dollar among the G10 currencies, having fallen 3.4 per cent for the month so far. Shaun Osborne, chief FX strategist for Scotiabank, notes that only Norway’s currency has done worse, falling 6.8 per cent.

On global markets, safe-haven currencies gained with both the Swiss franc and the Japanese yen advancing against the U.S. dollar.

In early London trading, the Japanese currency climbed 0.8 per cent versus the greenback to 103.65 yen just below a four-year high of 101.28 hit on Monday, according to Reuters. The Swiss franc climbed 0.2 per cent $0.9365 versus the greenback.

The euro fell after the ECB offered more stimulus but held its key rate steady. The euro, which had been down leading up to the announcement, rose briefly to US$1.13 but then fell to as low as US$1.1198, down 0.5 per cent on the day.

In bonds, the yield on the U.S. 10-year note was lower at 0.721 per cent. The yield on the 30-year note was also down at 1.265 ahead of the North American open.

More company news

Canadian Tire Corp Ltd appointed Greg Hicks as its chief executive officer, succeeding Stephen Wetmore, who is retiring. Mr. Hicks most recently served as president of Canadian Tire’s retail unit.

Quebecor Inc. raised its dividend alongside higher fourth-quarter profit. The company says it will now pay a quarterly dividend of 20 cents per share, up from 11.25 cents. For the fourth quarter, Quebecor reported net income attributable to shareholders of $145.1-million or 57 cents per share, up from $117.5-million or 46 cents per share in the same period in 2018. Revenue for the quarter ended Dec. 31 totalled nearly $1.14-billion, up from nearly $1.09-billion in the same period a year earlier.

Empire Co. Ltd. says it earned $120.5-million or 45 cents per diluted share in its latest quarter, up from $65.8-million or 24 cents in the same period a year earlier. On an adjusted basis, Empire says it earned $123.7 million or 46 cents per diluted share, up from an adjusted profit of $72.9 million or 27 cents per diluted share a year earlier. Analysts on average had expected a profit of 46 cents per share, according to financial markets data firm Refinitiv.

TransAlta Corp. and its partner Tidewater Midstream and Infrastructure Ltd. have signed a deal to sell the Pioneer Pipeline to a subsidiary of TC Energy Corp. for $255-million. The Pioneer Pipeline includes 131 kilometres of operating pipeline in Alberta. It runs from west of Drayton Valley to west of Edmonton.

Apache Corp cut its spending forecast for the year and slashed its quarterly dividend by 90 per cent as shale drillers rush to shore up cash amid a crash in oil prices. Apache now expects its 2020 capital investments between US$1-billion and US$1.2-billion, down from an earlier forecast of US$1.6-billion to US$1.9-billion. The company cut its quarterly dividend to $0.025 per share from $0.25.

Dollar General Corp beat quarterly same-store sales expectations, as it pulled in more bargain-hungry shoppers to its stores. Same-store sales rose 3.2 per cent in the fourth quarter ended Jan. 31, above analysts’ average estimate of a 2.8 per cent increase, according to IBES data from Refinitiv. Net sales rose to $7.16-billion from $6.65-billion, marginally beating estimates of $7.15-billion.

Economic news

ECB monetary policy meeting

U.S. initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 211,000 for the week ended March 7, the Labor Department said. Data for the prior week was revised to show 1,000 fewer applications received than previously reported.

With Reuters and The Canadian Press

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