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Canada’s main stock index spiked Friday a day after a broad global decline in stocks triggered the biggest single-day loss in decades. On Wall Street, indexes also rebounded on hopes that more government stimulus would bolster the global economy as it battles the fallout from the spread of the coronavirus.
At 9:47 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 444.34 points, or 3.55 per cent, at 12,952.79. Rallying bank stocks pushed financials up 6.6 per cent. Energy stocks gained on improved crude prices.
In the U.S., the Dow Jones Industrial Average rose 773.20 points, or 3.65 per cent, at the open to 21,973.82.
The S&P 500 opened higher by 89.35 points, or 3.60 per cent, at 2,569.99. The Nasdaq Composite gained 408.59 points, or 5.67 per cent, to 7,610.39 at the opening bell.
On Thursday, the Dow posted its biggest percentage drop since 1987. The S&P 500 ended the session down 9.5 per cent, joining the Dow in bear market territory. The picture was even worse on this side of the border, with the S&P/TSX Composite Index plummeting more than 1,700 points to post the biggest loss since 1940.
“Markets might be bouncing on stricter U.S. containment measures, central bank policy deluge, and more fiscal [stimulus] to come,” AxiCorp trader Stephen Innes said in an early note. “But investors remain in peril’s path.”
He said lack of early testing in the United States had been contributing to early fears about the spread of the virus. But increasingly, local U.S. governments and other organizations are curtailing activities, offering some solace to panicked markets.
“The market has seemed to stabilize by that more-positive response from the U.S. policymakers,” he said. “Now the markets are awaiting the healthcare/fiscal package that House Speaker Nancy Pelosi and Treasury Secretary Mnuchin are working together on.”
Ms. Pelosi told reporters on Thursday that lawmakers and the White House are near an agreement on a legislative response to the outbreak. She also said she hopes to make an announcement on Friday.
Despite Friday’s respite, global stocks were still heading for their worst week since the 2008 financial crisis. The MSCI world equity index, which tracks shares in 49 countries, hit a three-year low in Asian trading and is down 16 per cent this week so far - its worst performance since October 2008 when Lehman Brothers’ collapse triggered the global crisis, according to Reuters.
The Canadian economy also appeared to be facing significant headwinds with Royal Bank predicting this country will slip into a recession later this year. The bank’s forecast said it expects to see the economy contract in both the second and third quarters as it deals with the fallout of the spread of the virus and tumbling crude prices.
Overseas, European markets, which saw one of their worst days on record on Thursday, surged in the week’s final session. By afternoon, the pan-European STOXX 600 was up more than 8 per cent. Britain’s FTSE 100 rose 8.27 per cent. Germany’s DAX gained 8.25 per cent. France’s CAC 40 spiked 8.89 per cent.
Early Friday, Norway’s central bank became the latest to cut rates in an attempt to bolster its economy as the virus spreads. Norges Bank cut its key policy rate by half a percentage point.
Still, Italian bonds continued to signal concern in European markets with the the benchmark 10-year yield -- which moves inversely to price -- rising another 16 basis points in early trade. The yield rose by 55 basis points on Thursday - its worst day since November 2011, near the peak of the euro zone debt crisis - after the European Central Bank kept rates steady and put the onus firmly on governments, sending markets into a tailspin, Reuters reported on Friday.
In Asia, stocks saw a volatile session on the back of Wall Street’s record losses with Japan’s Nikkei finishing down 6.08 per cent after dropping as much as 10 per cent early in the day. The Shanghai Composite Index ended down 1.23 per cent. Hong Kong’s Hang Seng lost 1.14 per cent.
Crude prices gained early Friday but were still set for their worst weekly decline since the financial crisis of 2008.
In early going, crude prices were up more than 4 per cent alongside stabilizing world markets. The day range on Brent is US$32.50 to US$35. The range on West Texas Intermediate is US$30.33 to US$33.26.
For the week, Brent is on track for a 24-per-cent price decline, its biggest drop since the final month of 2008. WTI is down about 21 per cent for the week, which also marks the biggest drop since the financial crisis.
Traders had already been struggling with demand concerns as the novel coronavirus spread when prices took a further hit after talks by OPEC and its allies to deepen and extend production cuts fell apart, sparking a price war between Saudi Arabia and Russia. Prices again fell Thursday after U.S. President Donald Trump imposed tight restrictions on travel from Europe to the United States, fuelling demand fears.
“The oil market has traded in lockstep with risk sentiment in Asia, which has been bolstered by more stringent COVID-19 policy containment measures out of the U..S and expectations of another fiscal deluge,” Mr. Innes said.
"But likely capping any rally impulse to this week’s highs, traders continue to run with the dominant Saudi and Russia supply narrative."
In other commodities, gold prices also rebounded but were headed for weekly declines.
Spot gold was up 0.8 per cent to US$1,588.83 per ounce, having fallen more than 1 per cent earlier. For the week, gold - which dropped more than 4 per cent on Thursday - is down about 5 per cent. U.S. gold futures fell 0.1 per cent to US$1,589.20.
“The recovery after panic selling across all asset classes has supported precious metals too,” Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai, told Reuters.
The Canadian dollar bounced higher early Friday as crude prices improved and broader markets staged a tentative rebound.
Ahead of the North American open, the loonie was trading near the higher end of the day range of 71.70 US cents to 72.40 US cents. On Thursday, the Canadian dollar touched its lowest level in four years against the U.S. dollar.
In an early note, RBC chief currency strategist Adam Cole said risk appears to be stabilizing after record declines.
“Asian equity markets are catching up with the fall in U.S. cash markets into the close, though U.S. futures are again eking out small gains overnight, which is setting the tone in FX markets,” he said.
The only Canadian economic release due Friday was for February existing home sales but Mr. Cole said those numbers will likely take a backseat to the broader risk backdrop. Other headlines that could affect the currency include news that Sophie Grégoire Trudeau, the wife of Prime Minister Justin Trudeau, has tested positive for the new coronavirus and the couple are isolating themselves for at least 14 days.
On global currency markets, the euro traded at US$1.12035, following a 0.7-per-cent drop on Thursday after the ECB said it would introduce more stimulus but kept its key rate unchanged. For the week, the euro is on course for a 0.7 per cent decline.
Against Britain’s pound, the U.S. dollar fell to US$1.2596 on Friday, following its biggest one-day gain against sterling since July 2016.
The dollar rose 1.1 per cent to 105.81 yen on Friday, on course for a 0.5-per-cent weekly advance.
More company news
Husky Energy Inc. is cutting spending this year by $1-billion in the wake of the downturn in the global energy market. The Calgary-based energy company says it’s reducing its capital spending program for this year by $900-million. Husky says it will also find another $100-million in cost-saving measures. The company expects its capital investments to total between $2.3-billion and $2.5-billion this year, down from its earlier plan for between $3.2-billion and $3.4-billion.
ARC Resources Ltd. cut its capital budget and slashed its dividend to help deal with the plunge on commodity markets. The oil and gas producer says it has reduced its capital budget for this year to no more than $300-million compared with an earlier plan to spend $500-million.
Xerox Holdings Corp said on Friday it would postpone a meeting with HP Inc shareholders amid the coronavirus outbreak.
Walt Disney Co will close its theme parks in California and Florida and its resort in Paris from this weekend through the end of the month due to the global outbreak of coronavirus, the company said on Thursday. Disney Cruise Line will suspend all new departures starting Saturday through the end of the month, the company said.
Apple Inc is reopening all 42 of its branded stores in China on Friday, a company spokesman said, more than a month after they were shut in the wake of the coronavirus outbreak. The iPhone maker’s Chinese website listed the opening time for all stores, which varies from 10:00 am to 11:00 am local time. The website had previously carried an advisory saying not all stores were open. Apple had announced the shuttering of its branded stores in early February. Apple shares were up more than 4 per cent in early trading.
The U.S. Labor Department says import prices fell 0.5 per cent last month after an upwardly revised 0.1-per-cent gain in January. Import prices were previously reported to have been unchanged in January.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for March.
With Reuters and The Canadian Press