Apr 20, 2020
Equity markets mixed amid historic crash in WTI crude prices
BNN Bloomberg's mid-morning market update: April 20, 2020
4:25 p.m. ET: Equity markets mixed amid historic crash in WTI crude prices
It was a historic day on crude oil markets, with U.S. benchmark West Texas Intermediate plunging into negative territory for the first time to settle at –US$37.63 per barrel. The ongoing demand destruction stemming from the forced hibernation of the global economy, concerns over a lack of storage and the looming expiration of the futures contract for May delivery hammered the price of WTI.
The contract for June delivery of crude held up far better than the May contract, with oil’s longer-dated futures settling closer to US$21 per barrel. Alberta’s Western Canadian Select fell 16 per cent to US$9.32 per barrel, though Canadian crude is only priced a handful of times per day.
North American equity markets were mixed to close out Monday’s session, with the S&P/TSX Composite Index clinging to a 0.2 per cent gain, the Nasdaq Composite Index falling 1.03 per cent, the S&P 500 shedding 1.79 per cent and the Dow Jones Industrial Average losing 2.44 per cent.
In Toronto, five of the 11 TSX subgroups finished in positive territory, led by information technology, materials and health care. Consumer discretionary stocks, utilities and industrials were the largest percentage losers.
Shopify Inc. continued its march higher, with shares rising nearly seven per cent. The ecommerce platform provider briefly surpassed TD Bank Group as Canada’s second-largest company by market capitalization earlier in the trading day, though TD did regain its mantle at the close.
The Canadian dollar fell nearly a full per cent against its U.S. counterpart, trading at 70.80 cents U.S. shortly after 4 p.m. ET.
11:30 a.m. ET: North American equity markets mixed after early swoon
North American equity markets were mixed heading into late morning trading on Monday, with the S&P/TSX Composite Index and Nasdaq Composite Index pushing modestly into positive territory, while the S&P 500 and Dow Jones Industrial Average remained in the red.
In Toronto, the benchmark index pushed past some early oil-price-induced weakness to rise about 0.5 per cent. Five of the 11 TSX subgroups were in positive territory, with information technology, materials and health care posting the largest percentage gains.
Shopify Inc. continued its outperformance, with shares rising about four per cent. The e-commerce platform provider’s market capitalization eclipsed that of Toronto-Dominion Bank to make the company the second-most valuable publicly-traded firm in Canada, trailing only Royal Bank of Canada.
If Shopify were to surpass RBC, it would mark an exceedingly rare occurrence. Only two technology stocks have ever claimed the largest market capitalization on the TSX: Nortel Networks at the height of the dot-com bubble and BlackBerry – then Research in Motion – in 2008. Both came crashing back to earth, with Nortel filing for bankruptcy in 2009 and BlackBerry now trading at a fraction of its peak valuation.
Oil prices continued to crater, with U.S. benchmark West Texas Intermediate crude falling 42 per cent to trade at US$10.52 per barrel, the largest intraday decline since futures began trading in 1982. There has been pronounced volatility in crude futures as the expiration of the May contract looms Tuesday. Contracts for June delivery are trading in the US$22-per-barrel range, about twice the value of the May contract.
Alberta’s Western Canadian Select was trading at US$7.78 per barrel, down about 30 per cent, though Canadian crude is only priced a handful of times per day.
The Canadian dollar was down about 0.35 per cent against its U.S. counterpart to trade at 71.18 U.S. cents.
9:40 a.m. ET: North American markets stumble, oil craters to begin the week
North American equity markets fell at the open of Monday’s trading session, with the S&P/TSX Composite Index, S&P 500, Dow Jones Industrial Average falling more than one-and-a-half per cent and the Nasdaq Composite Index shedding about one per cent.
The drop came as investors digested the ongoing impact of the COVID-19 virus outbreak, the destruction of oil demand and the stream of corporate earnings.
Oil prices cratered, with U.S. benchmark West Texas Intermediate falling as much as 39 per cent, the largest single-day decline since crude futures trading began in 1982. WTI was trading just shy of US$11 per barrel shortly after the opening bells.
The oil futures markets have seen some pronounced volatility ahead of Tuesday’s May contract expiration, with oil priced for June delivery trading at about twice the price of the May contract.
There is mounting concern oil storage capacity is being rapidly depleted due to persistent oversupply as the global economic shutdown hurts oil demand.
Alberta’s Western Canadian Select fell to US$7.78 per barrel.
The Canadian dollar fell more than half a per cent against its U.S. counterpart to trade at 71 cents U.S.