TSX Biggest Drop Since 1987, Over A Decade Of Gains Erased

MoneySpencerFernando

The market plunged 10%, triggering circuit-breakers that halted trading.

Canadians Stocks plunged today, amid the oil price collapse and rising fears that Coronavirus will severely damage economies around the world.

It’s the worst drop since Black Monday in 1987. The TSX is now down to where it was before the 2008-2009 financial crisis, erasing over a decade of gains.

“LEVEL 1 MARKET-WIDE CIRCUIT BREAKERS TRIGGERED: At the instruction of IIROC, TSX, TSXV and TSX Alpha have been halted due to the triggering of a level 1 market-wide circuit breaker. Markets are now in Pre-Open state and are set to resume trading at 09:50:00”

According to a report, there are serious warnings about the damage being done to Canada’s economy:

““The oil price crash will do irreparable damage to the Canadian economy and stock market,” said Ed Moya, a senior market analyst at Oanda Corp. in New York. “Canadians will have to brace for lower prices for the foreseeable future and the oil sector will have to consolidate. Even when virus fears ease, the oil-dependent Canadian economy snapback rally will lag their peers,” he said.”

“The Canadian dollar is embattled with risks to already weak economic growth coming from all angles,” Simon Harvey a London-based market analyst at Monex Europe Ltd. and Monex Canada Inc., said by email. “Markets are coming to the realization that rate cuts by the Bank of Canada will soon lose their effectiveness on supporting the economy, especially with the latest risk of a lower oil price for longer.”

The yield on 10-year Canadian government bonds had dropped to 0.225%, which – given the rate of inflation – equates to negative rates, a sign that investors are seeking a desperate flight to safety.

To get a sense of the damage that’s already taken place, the drop today wipes out an entire decade of gains:

Spencer Fernando

Photo – Twitter