TORONTO — Canada's largest stock index flirted with correction territory Friday after plunging for a sixth-straight day, capping off its worst week since the global financial crisis of 2008.
The S&P/TSX composite index was down as much as 821 points after a technical problem forced an early end to trading on the Toronto Stock Exchange on Thursday.
That marked an 11.5 per cent drop from the record high set Feb. 20.
It partially recovered to move slightly below the 10 per cent correction threshold but was still the worst day in 15 months, losing 454.39 points or 2.7 per cent to close at 16,263.05.
In New York, the Dow Jones industrial average was down 357.28 points at 25,409.36. The S&P 500 index was down 24.55 points at 2,954.21, while the Nasdaq composite was up 0.89 of a point at 8,567.37.
Although the markets clawed back from early losses, in part due to supportive comments from Federal Reserve chairman Jerome Powell, they concluded the worst week since the global financial crisis in 2008 and arguably the worst week of all-time.
The TSX was down 8.9 per cent for the week while Nasdaq was off 10.5 per cent, S&P 500 down 11.5 per cent and the Dow off 12.3 per cent.
Philip Petursson, chief investment strategist at Manulife Investment Management, says the volume of trades for ETFs that didn't really exist in the last selloffs and the steepness of this week's decline makes this the worst week ever.
"I think it's just a function of the market today that it's very easy to hit the sell button in a vehicle that is an indiscriminate seller of all the securities within that investment vehicle," he said in an interview.
Petursson said the TSX hasn't been hit as badly as U.S. exchanges because its valuations didn't rise as much, ensuring that a cheaper market has a greater margin of safety.
Gold has helped to cushion the TSX from the more severe declines sustained in the U.S. but the precious metal that's typically a safe haven for investors fell 4.6 per cent on the day.
The April gold contract was down US$75.80 at US$1,566.70 an ounce and the May copper contract was down 3.15 cents at US$2.54 pound.
Oil plunged to its lowest level since late December 2018 on concerns that the spreading virus known as COVID-19 will suppress demand from China and elsewhere as businesses curtail activities and consumers reduce travelling and spending that form a key part of the U.S. economy.
The April crude contract was down US$2.33 at US$44.76 per barrel and the April natural gas contract was down 6.8 cents at US$1.68 per mmBTU.
Other sectors on the TSX, including defensive parts of the market, all suffered dramatic decreases led by materials and telecommunications.
Lower metal prices pushed the materials sector down 5.2 per cent as shares of miners First Majestic Silver Corp. and Centerra Gold Inc. each lost more than 11 per cent.
Telecommunications fell 4.1 per cent as regulatory hearings into the future of wireless services concluded with a consumer advocacy group saying that high wireless internet prices will only get worse unless the CRTC makes a dramatic move to increase competition.
Shaw Communications Inc. fell 5.4 per cent, while Rogers Communications Inc., BCE Inc., and Telus Corp. also saw steep share declines.
The Canadian dollar traded for 74.47 cents US, the lowest level since June, compared with an average of 74.84 cents US on Thursday.
Petursson said the big concern for investors that prompted the market selloff is that corporate earnings will ultimately be hit by an economic disruption caused by the ripple effect of companies scaling back operations and staffing which results in weaker consumer spending.
"As money gets passed around, spent, that is going to dramatically slow down and that's going to impact economies and ultimately as far as the market is concerned, that's going to impact earnings," Petursson said.
He expects the volatility will continue with markets likely losing more ground even as investors are looking for some clarity about the coronavirus.
"I don't think we're going to get it next week. I think we can continue to see volatility but perhaps not to the same extent as we've seen this week," he said.
"The coronavirus was the catalyst to the selloff this week in that it forced market participants to take a look at the fundamentals. The market was ahead of the fundamentals a week ago and so this is an adjustment to where we should have been."
This report by The Canadian Press was first published Feb. 28, 2020.
Companies in this story: (TSX:SJR.B, TSX:RCI.B, TSX:BCE, TSX:T, TSX:FR, TSX:CG, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press