BNN Bloomberg's closing bell update: April 15, 2020
4:45 p.m. ET: North American equity markets sink with virus reality in focus
North American equity markets closed Wednesday in negative territory as investors digested some early economic indicators of the depth of the damage caused by global measures to contain the spread of COVID-19.
The S&P/TSX Composite Index fell 2.10 per cent to settle below the 14,000 mark. The S&P 500 shed 2.20 per cent, the Dow Jones Industrial Average dropped 1.86 per cent and the Nasdaq Composite Index lost 1.44 per cent, erasing Tuesday’s advances.
It was a risk-off day, with investors fleeing equities for traditional safe havens like the Japanese Yen, U.S. Dollar and Treasury bills after a slate of dour economic data points.
U.S. retail sales plunged a record 8.7 per cent in March, before the full impact of virus-induced shutdowns rippled through the American economy. Empire Manufacturing data – a measure of manufacturing activity in New York state – cratered to the lowest level on record.
Here at home, Statistics Canada estimated the domestic economy likely contracted nine per cent month-over-month in March, which would mark the largest drop since the agency began gathering and publishing data in 1961.
The Bank of Canada painted a dire picture of how the domestic economy could fare in the second quarter, warning that in a worst-case scenario, activity could fall 30 per cent on an annualized basis. The central bank held its benchmark rate at 0.25 per cent, which governor Stephen Poloz had previously said was the effective lower bound for monetary policy in Canada. The Bank of Canada also expanded its asset purchasing plan to provincial bonds and investment grade corporate debt.
The oil trade was choppy, with U.S. benchmark West Texas Intermediate falling nearly five per cent at midday, only to bounce into modestly positive territory into the late afternoon. WTI held above US$20 per barrel shortly after 4 p.m. ET, though it remains near its lowest level since 2002.
Global crude prices initially took a hit after the International Energy Agency forecast world demand for oil would fall nine per cent this year. A record 19.2-million barrel crude inventory build in the United States added further pressure mid-morning.
Alberta’s Western Canadian Select crude rose 31 per cent to settle at US$7.48 per barrel, though Canadian crude trading is somewhat illiquid and WCS only prices a handful of times per day.
The volatility in crude and the strength in the U.S. dollar hammered the Canadian dollar, with the loonie falling more than one-and-a-half per cent against the greenback to below 71 cents U.S.
In Toronto, 10 of the 11 TSX subgroups finished in negative territory, with financials, energy and utilities posting the largest percentage declines. The consumer staples sector clung to gains, finishing the trading session up 1.57 per cent.
198 of the 230 TSX constituents closed in the red. Secure Energy Services Inc., Enerflex Ltd. and Vermilion Energy Inc. were the lead laggards on the composite.
1:50 p.m. ET: North American equities pare losses, crude prices bounce
North American equity markets pared earlier losses heading into the mid-afternoon, with the S&P/TSX Composite Index down about 1.7 per cent after threatening to fall below the 13,900 earlier in the day. South of the border, the S&P 500 and the Dow Jones Industrial Average were both down more than two per cent, while the Nasdaq Composite Index shed a little less than one-and-a-half per cent of its value.
In Toronto, 10 of the 11 TSX subgroups were in negative territory, with energy, health care and real estate posting the largest percentage gains. The consumer staples sector held onto its gains.
Oil prices bounced, with U.S. benchmark West Texas Intermediate essentially unchanged after earlier falling more than four-and-a-half per cent, though there were no evident catalysts for crude’s reversal. WTI prices remain at the US$20 per barrel level – an 18-year low – amid concerns over global demand destruction in the face of the economic shutdown to fight the spread of COVID-19. Alberta’s Western Canadian Select prices rose to US$6.35 per barrel, after falling below US$3 per barrel on Tuesday.
The Canadian dollar remained under pressure, down a little more than a full penny against the U.S. dollar at 71.00 cents U.S.
11:45 a.m. ET: North American equities lose ground amid risk-averse trade
North American equity markets continued to trade in negative territory into midday, though the benchmark indices were off the session lows. The S&P/TSX Composite Index fell a little more than two per cent, the S&P 500 and Dow Jones Industrial Average fell around two-and-a-half per cent and the tech-heavy Nasdaq Composite Index was down a little more than one-and-a-half per cent.
Oil prices remained under pressure, with U.S. benchmark West Texas Intermediate prices plumbing session lows, down about three per cent to trade in the US$19.50 per barrel range. Crude came under increased pressure after the U.S. Department of Energy reported American stockpiles rose by a record 19.2 million barrels last week, the 12th straight inventory buildup. Alberta’s Western Canadian Select rose modestly to US$5.94 per barrel, though Canadian crude is priced sporadically throughout the day.
That crude price pressure was evident on the TSX, where the energy subgroup was the worst performing sector on the composite, down four-and-a-half per cent. In all, only two of the 11 TSX subgroups were trading higher, with consumer staples and information technology clinging to positive territory.
On a stock-specific basis, energy names dominated the list of laggards in Toronto. Vermilion Energy Inc. was the worst performer, with shares plunging 17 per cent amid the drop in crude and the company’s decision to suspend its monthly dividend. Shares of Secure Energy Services Inc., Seven Generations Ltd. and MEG Energy Corp. all fell more than 13 per cent.
Investors continued to flock to traditional safe-haven assets during Wednesday’s risk-off trade, sending the Japanese Yen, U.S. Dollar and treasuries higher.
9:45 a.m. ET - North American markets fall as virus impact becomes clearer
That combination of U.S. dollar strength and crude weakness weighed on the Canadian dollar, which fell more than a full cent to 70.87 cents U.S.
North American equity markets slumped in early trading Wednesday as investors digested economic readings on the impact of measures to combat the spread of the COVID-19 virus. The S&P/TSX Composite Index, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite Index all fell more than two per cent shortly after the markets opened.
On the economic front, there were a handful of negative prints on both sides of the border. Statistics Canada said the domestic economy likely contracted 9 per cent month-over-month in March, the largest drop since at least 1961 when the agency began keeping record. South of the border, U.S. retail sales plunged a record 8.7 per cent in March, and a read on New York manufacturing activity in early April collapsed to the lowest on record.
The risk-off sentiment had investors flocking to some traditional safe-haven plays, pushing the U.S. dollar, treasuries and the Japanese Yen higher.
Oil prices came under renewed pressure, with U.S. benchmark West Texas Intermediate falling below US$20 per barrel, the lowest level since 2002. The International Energy Agency said Wednesday it expects global oil demand will fall nine per cent this year due to the global slowdown. Alberta’s Western Canadian Select fell 15 per cent to trade at US$4.84 per barrel.
The one-two punch of lower oil prices and U.S. dollar strength hammered the Canadian dollar, sending the loonie more than a full cent lower against the greenback to about 70.94 cents U.S. There could be further volatility ahead for the loonie when the Bank of Canada releases its rate decision and monetary policy report at 10 a.m. ET.