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Markets tumble as California declares coronavirus emergency – Global News

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U.S. stock markets dropped more than 2% on Thursday as the swift spread of the coronavirus in the United States led California to declare an emergency, while airline stocks were hammered by crippled travel demand.

Down almost 12% last week – its worst since the 2008 financial crisis – the S&P 500 had recovered some poise as Joe Biden’s surge in the Democratic primaries distracted traders from the widening impact of the virus.






1:51
COVID-19 coronavirus concerns spark Bank of Canada rate cut


COVID-19 coronavirus concerns spark Bank of Canada rate cut

The benchmark index, however, is still about 7.5% below its record close on Feb. 19 and fears about the economic fallout remain at the forefront of investors’ minds.

The U.S. death toll from the outbreak rose to 11 on Thursday and California reported the first fatality outside Washington state, a day after lawmakers approved an $8.3 billion bill to combat the outbreak.

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In Toronto, the S&P/TSX composite index was down 217 points, or 1.3%, to 16,562 at 10:33 a.m. ET.

The CBOE Volatility index, Wall Street’s fear gauge, jumped 4.61 points to 36.63.

READ MORE: Canadian banks lower lending rates after Bank of Canada rate cut

“Volatility is the norm right now as we ascertain how much economic damage is going to be done in the wake of the coronavirus epidemic,” said Art Hogan, chief market strategist at National Securities in New York.

U.S. airline Southwest slipped 4.3% after issuing a revenue warning as the outbreak crushes passenger numbers, while United Airlines and JetBlue Airways cut flights and implemented cost controls.

The International Air Transport Association also flagged a potential $113 billion hit to global airline revenue, sending the S&P 1500 airlines index down down 5.7%.

Cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings sunk between 7.9% and 10.6% as health officials screened people on a cruise line linked to the death in California.






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How COVID-19 may impact your pocketbook


How COVID-19 may impact your pocketbook

At 9:48 a.m. ET, the Dow Jones Industrial Average was down 710.78 points, or 2.62%, at 26,380.08 and the S&P 500 was down 76.15 points, or 2.43%, at 3,053.97. The Nasdaq Composite was down 191.55 points, or 2.12%, at 8,826.54.

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All of the major S&P sectors were in the red with technology stocks weighing the most on the benchmark index.

READ MORE: Trudeau creates new Cabinet committee to tackle COVID-19 outbreak

The rate-sensitive bank sub-sector dropped 4.6%, while the broader financial sector slipped 3.7%.

Traders are betting on more monetary easing after an emergency interest rate cut by the Federal Reserve earlier this week, further pressuring U.S. Treasury yields.

The Bank of Canada fully matched the Fed’s cut by lowering the target of its own trend-setting interest rate by half a percentage point, from 1.75% to 1.25%, on Wednesday.

HP Inc dipped 0.6% as the personal computer maker rejected a raised takeover bid of about $35 billion from Xerox Holdings Corp.

Declining issues outnumbered advancers for a 9.21-to-1 ratio on the NYSE and a 4.84-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 39 new lows, while the Nasdaq recorded six new highs and 105 new lows.

— With files from Erica Alini at Global News

© 2020 Reuters

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Did Elon Musk violate Twitter's NDA agreement? Former SEC Chair Jay Clayton weighs in – CNBC Television

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Ukraine war: McDonald's to sell its Russian business – CTV News

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More than three decades after it became the first American fast food restaurant to open in the Soviet Union, McDonald’s said Monday that it has started the process of selling its business in Russia, another symbol of the country’s increasing isolation over its war in Ukraine.

The company, which has 850 restaurants in Russia that employ 62,000 people, pointed to the humanitarian crisis caused by the war, saying holding on to its business in Russia “is no longer tenable, nor is it consistent with McDonald’s values.”

The Chicago-based fast food giant said in early March that it was temporarily closing its stores in Russia but would continue to pay its employees. Without naming a prospective Russian buyer, McDonald’s said Monday that it would seek one to hire its workers and pay them until the sale closes.

CEO Chris Kempczinski said the “dedication and loyalty to McDonald’s” of employees and hundreds of Russian suppliers made it a difficult decision to leave.

“However, we have a commitment to our global community and must remain steadfast in our values,” Kempczinski said in a statement, “and our commitment to our values means that we can no longer keep the arches shining there.”

As it tries to sell its restaurants, McDonald’s said it plans to start removing golden arches and other symbols and signs with the company’s name. It said it will keep its trademarks in Russia.

Western companies have wrestled with extricating themselves from Russia, enduring the hit to their bottom lines from pausing or closing operations in the face of sanctions. Others have stayed in Russia at least partially, with some facing blowback.

French carmaker Renault said Monday that it would sell its majority stake in Russian car company Avtovaz and a factory in Moscow to the state — the first major nationalization of a foreign business since the war began.

For McDonald’s, its first restaurant in Russia opened in the middle of Moscow more than three decades ago, shortly after the fall of the Berlin Wall. It was a powerful symbol of the easing of Cold War tensions between the United States and Soviet Union, which would collapse in 1991.

Now, the company’s exit is proving symbolic of a new era, analysts say.

“Its departure represents a new isolationism in Russia, which must now look inward for investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, a corporate analytics company.

He said McDonald’s owns most of its restaurants in Russia, but because it won’t license its brand, the sale price likely won’t be close to the value of the business before the invasion. Russia and Ukraine combined accounted for about 9% of McDonald’s revenue and 3% of operating income before the war, Saunders said.

McDonald’s said it expects to record a charge against earnings of between US$1.2 billion and $1.4 billion over leaving Russia.

Its restaurants in Ukraine are closed, but the company said it is continuing to pay full salaries for its employees there.

McDonald’s has more than 39,000 locations across more than 100 countries. Most are owned by franchisees — only about 5% are owned and operated by the company.

McDonald’s said exiting Russia will not change its forecast of adding a net 1,300 restaurants this year, which will contribute about 1.5% to companywide sales growth.

Last month, McDonald’s reported that it earned $1.1 billion in the first quarter, down from more than $1.5 billion a year earlier. Revenue was nearly $5.7 billion.

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Canadian home prices fall 6% in April, down for 2nd month in a row – CBC News

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Canadian home prices fell six per cent to $746,000 in April, as higher interest rates poured cold water on a red-hot real estate market.

Home sales fell 12 per cent nationally in April, with the biggest drops seen in big cities like Toronto, the Canadian Real Estate Association said Monday.

  • Are you having a hard time cracking into the housing market? Tell us about your experience by sending an email to ask@cbc.ca or join us live in the comments.

Prices peaked at a record high of more than $816,000 in February this year and average home prices have now declined for two months in a row. In March, the average price stood at $796,000, before falling another six per cent in April, which is typically a strong month for the housing market.

“Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue,” CREA chair Jill Oudil said in a statement.

CREA says the average selling price can be misleading because it is easily skewed by expensive and numerous sales in big cities like Toronto and Vancouver. It highlights a different number called the House Price Index as a better gauge of the market because it adjusts for the volume and type of homes sold.

The HPI shrank by 0.6 per cent in April, the first monthly decline in two years.

While prices are down from their recent peak, they remain up by about seven per cent from where they were a year ago.

Still, the numbers paint a picture of a housing market cooling from its feverish activity just a few months ago.

“The exorbitant run-up for more expensive units (like detached homes) during the pandemic may give way to a steeper decline,” TD Bank economist Rishi Sondhi said in a note to clients. 

“Moving forward, we expect prices to continue falling, reflecting the cooler demand backdrop.”

A problem for sellers — and some buyers, too

Lower prices may be welcome news for buyers trying to get into the market, but they’re anxiety-inducing for those trying to sell — especially if they’ve already bought somewhere else themselves.

For some recent buyers, a market that’s cooled after they’ve bought can cause major headaches. Some who bought at the highs assuming their lenders would loan them a certain amount are discovering in the appraisals process that the bank is valuing that property by less than anticipated, which forces the buyers to have to come up with more than they were expecting up front.

Leah Zlatkin, a mortgage broker with Lowestrates.ca, gives the example of a buyer who offered $1.2 million on a home and assumed their lender would finance 80 per cent of the cost. On appraisal, however, the lender valued the property at $1.1 million, which forces the buyer to come up with tens of thousands of dollars more than they anticipated.

“When home purchasers have really stretched their budget and bid over asking price, we are starting to see those appraisals come in a little bit lower in some cases,” Zlatkin told CBC News.

Keith Lancastle, CEO of the Appraisal Institute of Canada, says it’s not uncommon in frothy markets for buyers to get carried away and offer far more than an appraiser values the property at — and the same is true of down markets.

“The selling price doesn’t drive the mortgage, the appraised value drives the mortgage, and that’s the value that the lenders base their decision on,” he said.


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