Jon Erlichman

Anchor

Follow|Archive

It’s been one year since the World Health Organization declared COVID-19 a global pandemic on March 11, 2020.

With the S&P/TSX Composite Index currently trading at an all-time high, it’s easy to forget the panic that existed in the markets at this time last year.

Fears surrounding a global economic collapse were building, prior to the WHO’s official pandemic declaration.

By the time the announcement was made, central banks had already taken dramatic action to address the potential impact from the virus.

The Bank of Canada had quickly followed the U.S. Federal Reserve in slashing interest rates.  

For Canada, it was the biggest rate cut since 2009 and its first in four years — and as we now know, only a taste of what was to come.

On the same day that the WHO declared COVID-19 pandemic, Prime Minister Justin Trudeau pledged $1 billion to help the heath-care system and economy cope.

“We are pulling out all the stops to make sure Canadians stay safe, healthy, and supported,” he said during a news conference on Parliament Hill.

Little did we know at the time how small a figure $1 billion would eventually look in the fight against COVID.

And Trudeau’s initial support did little to calm nerves in the market.

The S&P/TSX Composite Index closed that day in a bear market, after falling 20 per cent from its February high.

The next morning, more investor panic triggered fresh trading halts in the stock market.

By the end of the day, the TSX had plunged more than 12 per cent — its largest single-day decline since 1940.

The sector that initially took the biggest hit was the energy group.

Recall Saudi Arabia’s initial response to the economic worries was to launch an oil price war with Russia, which threatened Canada’s energy industry.

When all was said in done, Canada’s energy stocks shed more than 30 per cent of their value in March — with companies such as Cenovus Energy Inc. and MEG Energy Corp. experiencing drops of more than double that amount during that period.

In fact, less than ten TSX stocks managed to gain ground in that ugly month — largely grocery store chains and gold companies.

At the time, few could have predicted the stock market would gain ground over the next three months — but it did.

In Canada’s case, it was partially fueled by the gold sector, but also the emergence of the typically less influential technology sector.

A new retail landscape, dominated by e-commerce, helped tech darling Shopify Inc. rally more than 70 per cent over a three-month stretch from mid-March and mid-June.

And we know how things have played out since then. Central banks and governments have continued to flood the markets with money. Rapid development of vaccines boosted global optimism and now Canada’s recovery is prompting questions around when interest rates will rise, as opposed to how long they’ll stay at record lows.

Away from the stock market, we’ve watched Canadians pile into the housing market, pushing up prices in cities such as Toronto and Vancouver.

In the final three months of last year, investors began to make substantial bets on companies that, day-to-day, continue to struggle — take Air Canada, for example, which saw its stock climb 45 per cent in the final quarter of last year.

The arrival of Joe Biden in the White House, meanwhile, also sparked fresh optimism in Canada’s cannabis sector. That group has led this year’s rally, followed by energy and bank stocks, which have benefited from the improved economic outlook.

Add it all up and Canada’s stock market has rallied more than 65 per cent off its March lows from last year — a remarkable turnaround during this unprecedented period in our history.