The coronavirus pandemic has ripped through the global economy. The fear that COVID-19 would become a tipping point for the market crash and the recession has finally materialized.
No market index anywhere in the world has managed to stop the crash powered by the coronavirus. The S&P/TSX 60 Index, which was not doing well before either, crashed in the first week of March. At the time of writing, it has been down over 30%.
Coronavirus has struck some hard blows on various global industries, especially the oil, aviation, tech, and tourism sectors. Many stocks on the TSX could operate in bear territory for a while.
The good news is, the ongoing sell-off also provides an opportunity for you to make some long-term and promising investing decisions. Let’s look at two TSX stocks that should be in your coronavirus sell-off buying list.
The biggest bank in Canada
Royal Bank of Canada (TSX:RY)(NYSE:RY) is not just the largest bank of the country in terms of market capitalization. It is also a market leader in more or less every different financial service niche. Whether it is wealth management or mortgages and credit services or insurance, you will find RBC among the top three providers. The bank also provides its long-trusted banking services in the U.S. and Caribbean.
RBC stock has always been considered a reliable investment. The bank has been steadily paying dividends for decades while experiencing substantial stock growth. The current market crash has also affected the RBC stock, which has gone down by more than 12% this month.
However, this dip doesn’t reflect the reliable banking operations that RBC boasts about. The bank has a record of facing the recessions and coming out as a winner. So, the odds are in favour of RBC to come out strong from the current market onslaught.
As we all know, a pandemic is a driving factor behind the ongoing crash. This means the current downturn is not going to affect all the industries at the same level. In fact, it can prove to be an upturning phase for pharmaceuticals and healthcare companies. I would also suggest you consider buying something from that sector as well.
Jamieson Wellness (TSX:JWEL) could be an excellent option to buy during the ongoing sell-off. The company manufactures vitamins and other natural health supplements. Since vitamins are known for boosting the immune system, the sale of vitamin products could increase in the wake of coronavirus in comparison to regular days.
This unexpected demand for supplements can be an excellent growth opportunity for the TSX newbie that has its IPO in 2017.
Before the crash happened, Jamieson Wellness was doing well. Jamieson Wellness has already started showing signs of recovery from the crash. Before the crash, it was trading around $27, and now it is lingering around $25.
Keep your head up
A good investor keeps their portfolio diverse no matter what happens in the market. You can keep up with this approach by buying these stocks that belong to the opposite ends of the spectrum.
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Oil prices pull back after OPEC and Russia delay discussions on cutting output – CBC.ca
Oil prices fell on Monday after Saudi Arabia and Russia delayed a meeting to discuss output cuts that could help to reduce global oversupply as the coronavirus pandemic pummels demand.
Brent crude fell more than $3 US when Asian markets opened but recovered some ground, with traders hopeful a deal between the top producers was still within reach.
Brent was down 81 cents, or 2.4 per cent, at $33.30 US a barrel. U.S. crude was 65 cents, or 2.3 per cent lower, at $27.69 a barrel, after having earlier been as low as $25.28.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, are expected to meet on Thursday, instead of Monday, to discuss cutting production.
“Perhaps it is best that the meeting was delayed for producers to cement a minimum of common ground before the actual discussions take place on Thursday,” BNP Paribas analyst Harry Tchilinguirian said. He noted initial disappointment at the delay had driven down prices in Asian business.
Kremlin spokesperson Dmitry Peskov said Moscow was ready to co-ordinate with other oil exporting countries to help stabilize the market and that the OPEC+ meeting was delayed for technical reasons.
OPEC+ is working on a deal to cut production by about 10 per cent of world supply, or 10 million barrels per day (bpd), in what member states expect to be an unprecedented global effort.
But Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said even if the group agrees to cut up to 15 million bpd, “it will only be enough to scratch the surface of the more than 23 million bpd supply overhang predicted for April 2020.”
Sentiment was lifted by Saudi Arabia’s decision to delay releasing its official crude selling prices to Friday, pending the outcome of the OPEC+ meeting.
U.S. President Donald Trump has said he would impose tariffs on crude imports if needed to protect U.S. energy workers from the oil price crash.
Investor morale in the eurozone fell to an all-time low in April and the bloc’s economy is in deep recession because of the novel coronavirus, a survey showed on Monday.
“Wherever you look, the narrative is the same: the global economy is in a painful recession,” Stephen Brennock of oil broker PVM said. “As OPEC+ ponders fresh supply curbs, you can’t help but think that the oil market will continue to be at the mercy of the virus pandemic.”
Second wave of COVID-19 infections in China
Markets were also spooked when the National Health Commission of China said on Monday that 78 new asymptomatic cases had been identified as of the end of the day on Sunday, compared with 47 the day before.
Asymptomatic patients, who show no symptoms but can still pass the virus to others, have become China’s chief concern after strict containment measures succeeded in cutting the overall infection rate.
Premarket: Stocks jump on virus slowdown hopes, but oil slips on oversupply – The Globe and Mail
World stock markets jumped on Monday, encouraged by a slowdown in coronavirus-related deaths and new cases, though a delay in talks between Saudi Arabia and Russia to cut supply sent oil tumbling again.
Equity investors were encouraged as the death toll from the virus slowed across major European nations including France and Italy.
London’s FTSE raced up 2%, indexes in Paris and Milan rose 3% and Germany’s DAX gained more than 4% after Japan’s Nikkei finished with similar gains overnight.
There was plenty of news to demonstrate just how brutal the virus has been: eye-popping plunges in car sales and air travel in Europe, Britain’s prime minister being hospitalised , and Japan preparing to declare a state of emergency. But the markets appeared hopeful.
Wall Street S&P 500 emini futures were up almost 4%, close to their upper limit too, buoyed by comments from U.S. President Donald Trump that his country was also seeing a “levelling off” of the crisis.
“What is driving the market is the evidence that the number of new cases has started to turn the corner,” said Rabobank’s Head of Macro Strategy Elwin de Groot.
As well as a slowdown in deaths in Italy, he said, improvements were starting to become visible in Spain and even in the United States there had been a little bit of a let-up.
“When you see that happening you can start gauging when lockdowns can start to be gradually lifted. That gives a little bit more visibility and that is vital,” he added, although he stressed there were still huge uncertainties and risks.
As has been the pattern for most of the year, commodity markets saw the day’s other big moves.
Brent crude fell as much as $4 after Saudi Arabia and Russia, who have been at loggerheads this year over production, pushed back the planned start of a meeting of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, until Thursday.
OPEC+ is working on a deal to cut oil production by about 10% of world supply, or 10 million barrels per day (bpd), in what member states expect to be an unprecedented global effort.
The countries are “very, very close” to a deal on cuts, one of Russia’s top oil negotiators, Kirill Dmitriev, who heads the nation’s wealth fund, told CNBC.
But Rystad Energy’s head of oil markets Bjornar Tonhaugen said even if the group agreed to cut up to 15 million bpd, “it will only be enough to scratch the surface of the more than 23 million bpd supply overhang predicted for April 2020.”
In currency markets, the yen fell 0.6% to 109.14 against the dollar and weakened against other major currencies as Japan’s Prime Minister Shinzo Abe said the government would declare a state of emergency as early as Tuesday to curb a spike in coronavirus infections.
The dollar barely budged against the euro but the pound recovered having dipped 0.4% after British Prime Minister Boris Johnson was admitted to hospital for tests as he was still suffering symptoms of the coronavirus.
Yields on safe-haven German government bonds crept higher in fixed income markets too, reflecting the slightly brighter tone in world markets despite some painful data.
Investor morale in the euro zone fell to an all-time low in April and the currency bloc’s economy is now in deep recession due to the coronavirus, which is “holding the world economy in a stranglehold”, a Sentix survey showed.
Orders for German-made goods had already dropped 1.4% in February, German data showed. British car sales slumped 40% last month and Norweigen Air’s traffic plummeted 60%.
“Never before has the assessment of the current situation collapsed so sharply in all regions of the world within one month,” Sentix managing director Patrick Hussy said.
“The situation is … much worse than in 2009,” Hussy said. “Economic forecasts to date underestimate the shrinking process. The recession will go much deeper and longer.”
In Asia, stocks had also proven bullish. Australia’s benchmark index rose 4.33%, Japan’s Nikkei added 4.24% after a slow start, while South Korea’s KOSPI index climbed 3.85%. Hong Kong’s Hang Seng index was 2.18% higher.
That sent MSCI’s broadest index of Asian shares outside of Japan up 2%, on track for its best performance in more than a week.
Markets in mainland China were closed for a public holiday.
Worryingly, the number of new coronavirus cases jumped in China on Sunday, while the number of asymptomatic cases surged too as Beijing continued to struggle to extinguish the outbreak despite drastic containment efforts.
“Focus in markets will now turn to the path out of lockdown and to what extent containment measures can be lifted without risking a second wave of infections,” National Australia Bank analyst Tapas Strickland wrote in a note.
“Key to a strong rebound in China will be the ongoing lifting of containment measures, with Wuhan – the epicentre of the outbreak – set to lift containment measures on April 8.”
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Application process for emergency benefits for workers begins this morning – CTV News
Applications open today for the new federal emergency aid benefit for Canadians who lost their income because of COVID-19.
The Canada Revenue Agency will open its application portals this morning to those born in the first three months of the year, with those born in other months able to apply later in the week.
The agency is trying to keep demand from overwhelming its online and telephone systems.
More than two million Canadians lost their jobs in the last half of March as businesses across the country were forced to close or reduce their operations to slow the spread of the novel coronavirus.
Others are unable to work because they are required to self-isolate at home, or need to look after children whose schools and daycares are closed.
Finance Minister Bill Morneau anticipates the wage benefit will cost the government $24 billion.
People born in April, May and June can apply Tuesday, those born in July, August or September can apply Wednesday and applications are accepted Thursday from people born in October, November and December. Friday, Saturday and Sunday will be open to anyone.
Prime Minister Justin Trudeau said Sunday Canadians who sign up for direct deposit could get their first payment before the end of the week. It’s anticipated direct deposit applicants will get money within three to five days, while those who opt for printed cheques will get money in 10 days.
“While we still have a lot of work to do, we’re making good progress on getting you the support you need as quickly as possible,” Trudeau said.
However, opposition parties say there are some glaring holes in the aid that is leaving some people in need out of the program completely.
Conservative finance critic Pierre Poilievre said there are “serious design and delivery flaws” that should be fixed.
Poilievre said some small business owners who paid themselves with dividends don’t qualify because they won’t have $5,000 of employment income in 2019 as the benefit requires. Further, he said a worker who has lost most of their income but still has one contract or a handful of clients won’t qualify for any money because you can’t have any current income in order to be eligible.
“They are effectively banned from doing any amount of work that might help keep their business open,” he said.
Poilievre said there are some easy fixes, including adjusting the wage benefit down slightly if a worker earns some income, much like happens when someone is collecting employment insurance but manages to find work temporarily.
He also wants small business owners to be viewed as employees for the purposes of the emergency response benefit.
NDP MPs Peter Julian and Gord Johns wrote to Morneau Sunday also asking for changes, including to address the fact the benefit provides an incentive not to work at all.
They said workers who have lost most but not all of their shifts, or lost one part-time job but not the other, “are living on significantly reduced incomes” but won’t qualify for the benefit.
“The consequences are that they are now asking to be laid off or furloughed so that they can access the CERB,” they wrote. “This is causing significant disruptions to normal business, to essential services, and to community contributions on local economies.”
Opposition parties also want more clarity on the government’s biggest aid program, the $71 billion, emergency wage subsidy, that will cover up to 75 per cent of wages for businesses that choose to keep employees on the payroll rather than laying them off.
Poilievre said it is going to take too long for businesses to see any of that money, and some of them won’t survive that long.
The Conservatives and NDP both want the government to reconsider the requirement for businesses to show a 30 per cent drop in revenue in order to qualify.
To be eligible for the emergency benefit, workers must have earned at least $5,000 in 2019, or in the 12 months before applying. The benefit is the same for everyone regardless of previous income, and is a less complicated application process than for employment insurance.
This report by The Canadian Press was first published April 6, 2020.
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