The spread of a new strain of coronavirus from China to at least 16 countries has implications for the global economy, analysts warn. That includes Canada, where one confirmed case and one presumptive case of the new coronavirus have been detected so far.
If the current outbreak follows the course of past health scares, it will only be a temporary bump for the Canadian economy, according to an analysis by BMO economist Sal Guatieri. But that stumble would come as domestic growth has already entered a soft patch.
Typically, global health-care worries send stock markets into sell-off mode, with prices of airlines, restaurants and hotels hit especially hard, Guatieri said in a note published on Friday. At the same time, investors pile into safer assets.
3:00 Do Canadians need to worry about coronavirus?
Do Canadians need to worry about coronavirus?
On Monday, Canada’s benchmark S&P/TSX composite index was down about 0.6 per cent in midday trading, while the Dow Jones Industrial Average and the S&P 500 were down around one per cent, erasing a significant portion of their gains for January. Companies that rely on travel and tourism suffered steep losses. Meanwhile, the prices of safe-haven assets like gold and bonds rose.
The stock declines follow equity sell-offs in Europe earlier in the day. Most markets in Asia were closed for the Lunar New Year, with Chinese authorities extending the holiday to Feb. 2 in an effort to keep as many people as possible at home to contain the outbreak.
2:12 Lunar New Year celebrations continue under coronavirus scare
Lunar New Year celebrations continue under coronavirus scare
As with previous outbreaks, the new, fast-spreading coronavirus is also rattling commodities markets. Crude oil prices dipped below US$60 (C$78) for the first time in nearly three months on Monday, as reports of more businesses being forced to shut down fuelled expectations of slowing oil demand.
The dip in commodity prices typically has knock-on effects for the currencies of countries with resource-based economies, like Canada’s, Guatieri wrote.
On Monday, the Canadian dollar was trading at 75.78 cents U.S., compared with an average of 76.10 cents U.S. on Friday, which was already a four-week low.
Comments from the Bank of Canada, which recently trimmed its 2020 economic forecast, have also been putting pressure on the loonie.
In general, global epidemics tend to slow down broader economic growth, Guatieri wrote.
Story continues below advertisement
“People shop less, delay travel and stay home. Companies turn cautious and delay investments.”
Tweet This
While government moves to contain the crisis and increased demand for health-care services offsets the adverse economic impacts somewhat, “the economy slows nonetheless,” Guatieri said.
In 2003, the spread of SARS shaved 0.66 percentage points off annualized economic growth between March and June that year, according to an estimate from the Bank of Canada. The outbreak caused nearly 800 deaths worldwide, 44 of which were in Canada.
6:01 Is Canada doing enough to protect Canadians from the coronavirus outbreak?
Is Canada doing enough to protect Canadians from the coronavirus outbreak?
But the economic impact of SARS and other recent epidemics has been short-lived, Guatieri said.
Stock markets were quick to bounce back once the outbreak appeared to be under control and the number of cases began to fall, with economic activity also recovering rapidly, the report said.
In Canada, the full-year impact of the SARS outbreak was a reduction of a mere 0.1 per cent of GDP, according to the Bank of Canada.
Guatieri also noted the Chinese government is taking decisive steps to control the outbreak and health care authorities have better technology and protocols in place since the SARS crisis.
Story continues below advertisement
And while the new coronavirus outbreak strikes at a time when both the U.S. and Chinese economies are losing steam, economists have also been hoping for that growth slump to ease somewhat thanks to recent progress on trade negotiations with the approval of a “Phase 1” trade deal between Washington and Beijing.
The ratification of the Canada-United States-Mexico Agreement (CUSMA) is also expected to be a boost for Canada’s economy, ending the uncertainty that weighed on cross-border business as the three countries negotiated a trade agreement to replace NAFTA.
The bottom line is “it’s too soon to revise down our growth forecast” because of the latest health scare, Guatieri said.
— With files from Reuters and the Associated Press
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
