Canada’s main stock index closed lower on Monday on persisting worries over the economic damage from coronavirus pandemic and a decline in energy stocks after major oil producers agreed to output cuts limited losses.
Fears of a deep global recession continue to weigh on sentiment as the health crisis sparks production halts and mass furloughs. Earnings from U.S. companies are in focus this week.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 90.69 points, or 0.64%, at 14,075.94.
The energy sector slid 0.8% after major producers agreed record global output cuts to reduce a supply glut as the coronavirus pandemic hammers demand.
The heavyweight financial sector slid 2.8%, while industrial fell 2%
The materials sector, which includes precious and base metals miners and fertilizer companies, was up 5 per cent.
The index, which opened higher, was set to break a four-session winning streak. Last week, TSX rose 9.5% to post its biggest percentage gain in 11 years.
The Dow and S&P 500 fell on Monday after last week’s strong gains, as U.S. companies prepared to kick off a quarterly earnings season expected to be rough due to the coronavirus pandemic, while Amazon gains helped the Nasdaq end higher.
The Dow Jones Industrial Average fell 328.6 points, or 1.39%, to 23,390.77, the S&P 500 lost 28.19 points, or 1.01%, to 2,761.63 and the Nasdaq Composite added 38.85 points, or 0.48%, to 8,192.43.
Gold prices rose to their highest in more than seven years and the dollar fell slightly, with volume thin due to the Easter Monday holiday across Europe and parts of Asia, where markets in Australia, New Zealand and Hong Kong were closed.
U.S. Treasury yields rose as the cut to global oil output addressed a glut that has damaged the energy sector but reminded investors of the sharp economic contraction countries face.
Britain’s finance minister told colleagues the UK’s economy could shrink by 25% to 30% between April and June because of the coronavirus lockdown, the Times newspaper reported.
The slump in China’s exports is expected to have extended into March, while a collapse in oil prices likely deepened a decline in imports, a Reuters poll showed.
Chinese exports are expected to have fallen 14% in March from a year earlier, slowing the downturn somewhat from a 17.2% contraction in the January-February period. Imports are set to have shrunk 9.5% from a year earlier, the sharpest drop since July 2016 and deeper than a 4.0% decline in January-February.
“The market wants to find confidence in some of the recent developments, but I still think it’s going to be a very long slog,” said Gennadiy Goldberg, senior rates strategist at TD Securities in New York.
MSCI’s gauge of stocks across the globe shed 0.86% and its emerging market stock index lost 0.54%.
Corporate America reports first-quarter results this week, starting what is expected to be a painful quarterly earnings season due to the coronavirus pandemic.
Earnings for S&P 500 firms are expected to tumble 9.0% in the first quarter, compared with a Jan. 1 forecast of a 6.3% rise, before plummeting 20.7% in the second quarter as sweeping lockdowns halted business activity and spark furloughs.
The outbreak could reach its U.S. peak this week, a top U.S. health official said, and New York Governor Andrew Cuomo declared “the worst is over” for his state, the U.S. epicenter of the virus.
The United States, with the world’s third-largest population, has recorded more than 22,800 fatalities from COVID-19, or more than any other country, a Reuters tally shows.
The Nikkei fell 1.9% overnight in Japan and South Korean shares dropped 1.3%, while China’s CSI300 index lost 0.5%.
Oil prices have slumped more than 50% from their January peak as the coronavirus pandemic hit fuel demand.
International benchmark Brent futures rose 26 cents to settle at $31.74 per barrel. U.S. West Texas Intermediate (WTI) crude futures fell 35 cents to settle at $22.41 per barrel in a volatile session.
The dollar index fell 0.088% and the Japanese yen strengthened 0.79% versus the greenback at 107.61 per dollar.
Gold, seen as a store of value when inflation picks up, rose as investors sought the safe-haven on fear of the harm the coronavirus will do to the global growth and corporate earnings.
U.S. gold futures settled 0.5% higher at $1,761.40 an ounce and hit their highest since February 2013 at $1,769.50.
Central banks are doing everything in their power to support the stock market and economy, which will eventually lead to inflation, said Phil Streible, chief market strategist at Blue Line Futures in Chicago.
“Yields on debt instruments are virtually zero, which increases physical demand for gold and silver as a safe-haven asset,” Streible said.
Benchmark 10-year U.S. Treasury notes fell 9/32 in price to lift their yield to 0.749%.
Reuters
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