North American stock markets plunge on fears about rising COVID-19 infections

North American stock markets plunge on fears about rising COVID-19 infections

TORONTO — North American stock markets plunged midweek as investors worried about the rise in COVID-19 infections and negative polling data for U.S. President Donald Trump.

“Now that we’re starting to see a second wave or a resurgence in some of the southern states…I think that’s starting to creep into some investors’ psyche and causing a bit of profit-taking,” said Greg Taylor, chief investment officer of Purpose Investments.

The U.S. recorded a one-day total of 34,700 new COVID-19 cases, the highest in two months as several southern and western states set single-day records this week.

Investors have largely overlooked the virus, but the latest rash of infections are a stark reminder that forecasts for a quick economic recovery in the second half of the year may be overly optimistic.

“I think people are going to have a hard time ignoring that the v-shaped recovery isn’t going to be as smooth as some people thought,” he said in an interview.

Recent polling that puts former vice-president Joe Biden up to 14 points ahead of Trump in national polls have also prompted people to start considering that Democrats may be headed for substantial gains in November.

Republicans are traditionally viewed as more business-friendly. Before the coronavirus, stock markets surged to record highs but investors fear that Biden will eliminate personal and corporate tax cuts pushed by Trump.

“I think that would be a worry for the market from an earnings point of view,” said Taylor.

There’s also concern about potential efforts to break up big tech companies, a sector that largely fuelled the long bull market.

The S&P/TSX composite index closed down 270.37 points at 15,294.38.

In New York, the Dow Jones industrial average was down 710.16 points at 25,445.94. The S&P 500 index was down 80.96 points at 3,050.33, while the Nasdaq composite was down 222.20 points at 9,909.17.

With markets gaining back so much so fast, Taylor said there’s a big debate if the selloff will continue.

“I don’t think it’s going to go materially lower, another few per cent here is probably healthy at the end of the day.”

Consumer staples was the only one of 11 major sectors on the TSX to be up on the day.

Energy was the big loser, falling 3.8 per cent on a drop in crude oil prices. That pushed shares of Secure Energy Services Inc. and Vermilion Energy Inc. down 8.9 and 8.2 per cent respectively.

The August crude contract was down US$2.36 at US$38.01 per barrel and the August natural gas contract was down three cents at US$1.66 per mmBTU.

Energy was hit by fears about softening demand and a weekly report that showed record U.S. stockpiles as production ramped up sooner than expected.

Health care dropped 2.5 per cent, followed by financials and industrials.

Financials fell as Fitch Ratings stripped Canada of its triple-A credit rating over what it called “the deterioration of Canada’s public finances” due to the COVID-19 pandemic.

Separately Wednesday, a new estimate from the International Monetary Fund forecast a contraction of 8.4 per cent for Canada’s economy — 2.2 percentage points below its April estimate.

Fitch’s downgrade, which came a little sooner than expected, could put additional pressure on Canadian banks, said Taylor.

He said that could prompt people to start to wonder if it’s a signal that the Canadian economy is not as strong as some had thought.

Industrials fell with Chorus Aviation Inc. losing 6.1 per cent and Air Canada down 4.5 per cent.

Materials dropped 1.6 per cent with gold moving down from its perch of reaching the highest value in nearly nine years.

The August gold contract was down US$6.90 at US$1,775.10 an ounce and the July copper contract was down less than a penny at US$2.65 a pound.

The Canadian dollar traded for 73.58 cents US compared with an average of 73.99 cents US on Tuesday.

This report by The Canadian Press was first published June 24, 2020.

Companies in this story: (TSX:AC, TSX:CHR, TSX:SES, TSX:VET, 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

Sylvan Lake Municipal Library going waste free with new program

The Zero Waste DIY program begins on Sept. 26 at 2 p.m. on Zoom

COVID-19: Active cases in central zone up Tuesday

Central zone active cases remains lowest of all zones

PHOTOS: Eckville graduates receive their diplomas, finally

Eckville Jr./Sr. High School held a socially distanced grad over the weekend

Central zone active cases down to 20

Province provides update

Gord Bamford serenades Sylvan Lake at sold out concert

Gord Bamford played for a sold out crowd at a drive-in concert Sept. 19 in Sylvan Lake

Quirky Canadian comedy ‘Schitt’s Creek’ takes Emmys by storm with comedy sweep

Toronto-raised Daniel Levy and Ottawa-born Annie Murphy both got supporting actor nods

RCMP investigating after far-right groups disrupt anti-racism rally in Alberta

Red Deer Mayor Tara Veer said she respects the right of peaceful assembly, but denounces racism and violence

Refresh of Liberal government’s agenda comes amid new looming COVID-19 crisis

Lockdowns saw fed spending soar to historic levels in effort to offset pandemic’s blow to Canadians’ livelihoods

Public health officials urge Canadians to limit contacts again as COVID-19 cases rise

Canada has committed $1 billion to buy at least 154 million doses of vaccines from five different companies

Majority of Canadians support wearing masks during COVID-19, oppose protests: poll

Nearly 90 per cent felt wearing a mask was a civic duty because it protects others from COVID-19

RCMP say body located of man who fell in river during stop for photos in Banff

Parks Canada has said the man was from India and living in Canada on a work visa

Paper towel in short supply as people stay home, clean more, industry leader says

While toilet paper consumption has returned to normal levels, paper towel sales continue to outpace pre-COVID levels

Lacombe beekeepers give the buzz on winterizing hives

Winterizing a honeybee hive is not a simple task, local apiarists say

Most Read