Rising COVID-19 infections in the U.S. push stock markets lower to end week

Rising COVID-19 infections in the U.S. push stock markets lower to end week

TORONTO — North American stock markets capped a poor weak by moving sharply lower Friday on rising COVID-19 infections in the U.S.

New coronavirus cases in the United States hit a record high, raising investor concerns about the pace of the economic recovery. Rates were so high in Texas and Florida that their Republican governors backed down on loosening restrictions.

“When you hear headlines like we’re shutting things back down … that just brings back a risk-off tone,” said Erik Bregar, head of currency strategy at the Exchange Bank of Canada.

Equity markets have largely ignored infection rates as investors pinned their hopes on a rapid, so-called V-shaped recovery that Bregar said has been trumpeted by the “Wall Street machine” through the financial media.

Bond markets, however, have been more dubious. The 10-year U.S. Treasury yield was 0.68 per cent Friday.

“It’s just saying to me that there’s still a very bumpy road ahead,” Bregar said in an interview, adding the central banks will face growing pressure to deliver negative interest rates.

“I feel like if you’re looking for reality, bonds have everything priced in correctly in my opinion.”

If there was really going to be a V-shaped recovery coming, the 10-year Treasury would be above 1.5 per cent, he added.

The focus on infection rates seemed to neutralize a record 8.2 per cent increase in consumer spending in May.

The S&P/TSX composite index closed down 257.16 points at 15,188.98. It fell 1.8 per cent over the past week.

In New York, the Dow Jones industrial average was down 730.05 points at 25,015.55. The S&P 500 index was down 74.71 points at 3,009.05, while the Nasdaq composite was down 259.78 points at 9,757.22.

The Canadian dollar traded for 73.12 cents US compared with 73.29 cents US on Thursday and 73.99 on Tuesday afternoon.

“Since Tuesday morning the Canadian dollar has been weaker on a broad U.S. dollar safe-haven bid,” Bregar said.

Materials was the lone of 11 major sectors on the TSX to move higher. It gained 0.37 per cent on higher gold prices as B2Gold Corp. and Kinross Gold Inc. each gained about 3.3 per cent.

The August gold contract was up US$9.70 at US$1,780.30 an ounce and the September copper contract was up 0.1 of a cent at nearly US$2.68 a pound.

Health care fell the most at 3.9 per cent, followed by utilities, financials and energy.

The Bank of Montreal lost 4.1 per cent as the heavyweight financials moved lower. The decline came in response to the Federal Reserve on Thursday limiting dividend payments and barring share repurchases until at least the fourth quarter following its annual stress test.

Energy was down 2.5 per cent with Shawcor Ltd., Frontera Energy Corp. and Vermilion Energy Inc. off 11.8, eight and 7.2 per cent respectively.

The August crude contract was down 23 cents at US$38.49 per barrel and the August natural gas contract was down 0.2 of a cent at US$1.54 per mmBTU.

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

Companies in this story: (TSX:BTO, TSX:K, TSXSCL, TSX:FEC, 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

Comments are closed

Just Posted

PHOTOS: After a two-year hiatus, the Castor & District Museum is open for business

The hours are Thursdays, Saturdays and Sundays from 2 until 4 p.m for the duration of summer

A community update from the Castor FCSS

Castor & District FCSS has also received a couple of grants to provide support to the community through this difficult time

Red Deer remains at two active COVID-19 cases

Alberta confirms 94 new cases over past two days

PODCAST: Black Lives Matter in central Alberta Part 2

More insight into the Black Lives Matter movement of central Alberta

PODCAST: Black Lives Matter in central Alberta Part 2

More insight into the Black Lives Matter movement of central Alberta

Le Chateau starts work on producing 500,000 hospital gowns in Canada

Another Canadian company pivots to produce PPE

Canadian engineer released from Egypt needs treatment, family says

Canadian engineer released from Egypt needs treatment, family says

Inquiry into mass shooting in Nova Scotia facing delays due to ‘technicalities’

Inquiry into mass shooting in Nova Scotia facing delays due to ‘technicalities’

Quebec tractor driver charged after accident kills three children, injures seven

Quebec tractor driver charged after accident kills three children, injures seven

Most Read