North American stock markets plunge amid soaring COVID-19 infections

North American stock markets plunge amid soaring COVID-19 infections

North American stock markets plunge amid soaring COVID-19 infections

TORONTO — Surging global COVID-19 infections and lagging U.S. stimulus talks sent North American stock markets lower to start the week with Canada’s main index facing a broad-based decline led by energy.

“The tone in the markets here today is decisively risk-off,” said Candice Bangsund, portfolio manager for Fiera Capital.

Weekend virus numbers were worrisome, particularly in the U.S. which hit record new daily cases and seven-day averages that surpassed the mid-July spike.

“A big part of what’s worrying investors is, of course, the rise in cases and the potential for renewed restrictions on activity that would potentially weigh on the recovery,” she said in an interview.

That’s despite “fairly constructive” news on the vaccine front with Johnson & Johnson, along with AstraZeneca, restarting their late-stage trials following temporary halts and with AstraZeneca test results regarding immunity.

“There’s been a lot of positive news on the vaccine front over the last several days but the markets have largely shrugged off that positive news and are focusing here on the near-term fiscal stimulus deliberations as well as the spike in COVID cases,” Bangsund said.

The two factors are also prompting investors to crystallize some profits following market resilience up to October.

Bangsund said she believes markets will be predominantly focused on COVID until the numbers move decisively lower.

The S&P/TSX composite index closed down 224.53 points or 1.4 per cent to 16,079.55.

In New York, the Dow Jones industrial average was down 650.19 points or 2.3 per cent at 27,685.38. The S&P 500 index was down 64.42 points at 3,400.97, while the Nasdaq composite was down 189.34 points at 11,358.94.

All 11 major sectors on the TSX were lower, led by energy. It dropped 3.3 per cent on falling crude oil prices caused by a concern about demand with further lockdowns starting.

“On the supply side as well this is being compounded by higher output out of Libya, which is threatening the rebalancing narrative in the crude market and weighing on prices today,” said Bangsund.

The December crude contract was down US$1.29 at US$38.56 per barrel and the December natural gas contract was up 5.8 cents at US$3.25 per mmBTU.

Cenovus Energy Inc. lost 8.4 per cent in heavy trading after announcing a $3.8-billion deal Sunday to buy Husky Energy Inc., whose shares gained 12 per cent.

The Canadian dollar traded for 75.75 cents US compared with 76.10 cents US on Friday.

Consumer discretionary, health care, financials and industrials were also down.

Air Canada shares dropped 6.1 per cent on rising COVID cases, bad news for airlines which have been dramatically hurt by a dwindling of travel demand.

Materials was one of the best performers on the day, giving the TSX a cushion to outperform U.S. markets.

The December gold contract was up 50 cents at US$1,905.70 an ounce and the December copper contract was down nearly four cents at US$3.09 a pound.

Stronger-than-expected third-quarter earnings results so far are failing to move markets.

The rest of the week will be busy with central bank rate moves in Canada, Europe and Japan, along with economic data such as economic output.

American GDP numbers for the third quarter that will be released Thursday are expected to be historically high at about 31.8 per cent annualized.

“The question remains, what happens in the fourth quarter, but that will hinge on the progression of the virus, the potential for further fiscal support. But so far, the U.S. economy is actually holding up quite well,” said Bangsund.

Canadian GDP numbers for August are also expected to be strong with the third quarter tracking to be even better than in the U.S., she said.

But Bangsund said a lot of that good economic news is already factored into equity prices.

“If they surprise either positively or negatively by a wide margin, you could see some market movement. But I think there again, the biggest drivers for the markets this week will continue to be the fiscal negotiations and the progression of new virus cases.”

This report by The Canadian Press was first published Oct. 26, 2020.

Companies in this story: (TSX:AC, TSX:CVE, TSX:HSE, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

Business

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer property owners will receive their 2019 property assessment notices in the next few days.  (File photo by Advocate staff)
Red Deer awaiting more details on how federal budget impacts city

The City of Red Deer is awaiting more information on how much… Continue reading

With a ban on sit-in dining once again in place, Las Palmeras owner Andre Lemus is gearing up for more takeout and delivery business. He has also applied to set up an outdoor patio, where dining is allowed under new restrictions. Photo by PAUL COWLEY/Advocate staff
Big interest in outdoor patios in Red Deer as sit-down dining banned again

City of Red Deer has tweaked its patio regulations to make it easier to get a permit

Artist Delree Dumont has painted an Indigenous mural at St. Joseph High School. (Contributed photo)
Indigenous mural painted on Red Deer high school walls

A new Indigenous mural now sits on the walls of St. Joseph… Continue reading

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

Liz Weston: How the pandemic has shaken up retirement

Liz Weston: How the pandemic has shaken up retirement

Asad Behrawa performs a Muslim call to prayer over a loudspeaker at the Rahma Mosque west of Edmonton on Thursday, April 15, 2021. THE CANADIAN PRESS/Jason Franson
Emotions show as call to prayer broadcast during second Ramadan in lockdown

Emotions show as call to prayer broadcast during second Ramadan in lockdown

‘Midnight hour of need’: St. Vincent pleads for global help

‘Midnight hour of need’: St. Vincent pleads for global help

In this image from video, Hennepin County Judge Peter Cahill discusses motions before the court Thursday, April 15, 2021, in the trial of former Minneapolis police officer Derek Chauvin, at the Hennepin County Courthouse in Minneapolis. Chauvin is charged in the May 25, 2020, death of George Floyd. (Court TV via AP, Pool)
Murder case against ex-cop in Floyd’s death goes to the jury

Murder case against ex-cop in Floyd’s death goes to the jury

Finance Minister Chrystia Freeland delivers the federal budget in the House of Commons as Prime Minister Justin Trudeau looks on in Ottawa on Monday April 19, 2021. The federal government unveiled spending plans to manage the remainder of the COVID-19 crisis and chart an economic course for a post-pandemic Canada. THE CANADIAN PRESS/Sean Kilpatrick
Liberals top up long-term plan for affordable housing

Liberals top up long-term plan for affordable housing

Finance Minister Chrystia Freeland delivers the federal budget in the House of Commons as Prime Minister Justin Trudeau looks on in Ottawa on Monday April 19, 2021. The federal government unveiled spending plans to manage the remainder of the COVID-19 crisis and chart an economic course for a post-pandemic Canada. THE CANADIAN PRESS/Sean Kilpatrick
Federal Budget 2021: Liberals bank on child care, business aid to prod growth

Federal Budget 2021: Liberals bank on child care, business aid to prod growth

Finance Minister Chrystia Freeland delivers the federal budget in the House of Commons as Prime Minister Justin Trudeau looks on in Ottawa on Monday April 19, 2021. The federal government unveiled spending plans to manage the remainder of the COVID-19 crisis and chart an economic course for a post-pandemic Canada. THE CANADIAN PRESS/Sean Kilpatrick
Federal Budget 2021: Liberals focus on clean technology for climate spending

Federal Budget 2021: Liberals focus on clean technology for climate spending

Federal Budget 2021: Liberals extend COVID-19 aid with election top of mind

Federal Budget 2021: Liberals extend COVID-19 aid with election top of mind

Most Read