Shares skidded and the price of gold surged on Monday as the number of people infected or killed by the viral outbreak that began in China surged, heaping more uncertainty on the economic outlook.
The decline followed a sell-off Friday on Wall Street and a weekend meeting in Riyadh, Saudi Arabia, of finance ministers and central bank chiefs of the Group of 20 major industrial economies where officials warned the outbreak that began in China is threatening to derail world growth.
“Interestingly, this time it’s markets outside of China (where the spread of coronavirus continues to slow) that have taken the brunt of the nervousness,” said Colin Cieszynski, chief market strategist at SIA Wealth Management in Toronto.
Britain’s FTSE 100 sank 2.7 per cent to 7,203.77, while the CAC 40 in Paris lost three per cent to 5,850.92. Germany’s DAX fell 2.9 per cent to 13,188.98.
In North America, major stock indexes opened sharply lower. The Dow dropped by more than three per cent or almost 1,000 points when the market opened. The TSX was also down 337 points, or just over two per cent, within minutes of opening.
The price of gold, viewed as a safe haven in times of peril, jumped $33.70 to $1,682.40 per ounce.
The price of oil is also sharply lower. West Texas Intermediate, the North American oil benchmark, is down by $2.21 a barrel to $51.08. It lost 50 cents to $53.38 per barrel on Friday.
Brent crude, the international standard, gave up $1.87, or 3.3 per cent, to $56.08 per barrel.
The 70 latest new cases raised South Korea’s total to 833, and two more deaths raised its toll to seven. The latest updates sparked selling of shares, pulling the benchmark Kospi 3.9 per cent lower to 2,079.04,
The viral outbreak that began in China has infected more than 79,000 people globally and killed more than 2,600 people. China has reported 2,592 deaths among 77,150 cases on the mainland.
Meanwhile, China cancelled its annual legislative session, usually held in early March, as part of efforts to contain the spread of the virus.
Travel restrictions, business closures and other efforts in China aimed at containing the spread of the virus have begun to disrupt supply chains and sales prospects for Apple and other big companies.
China trying to stimulate economy
Earlier Monday, officials in Beijing promised more help for companies and the economy, saying they expect their growth targets can still be reached despite the outbreak.
At a news conference Monday, finance and planning officials said they are looking at how to channel aid to businesses after President Xi Jinping publicly promised over the past week to ensure farming and other industries recover quickly.
The government is looking at “targeted tax reduction,” interest rate cuts and payments to poor and virus-hit areas, said an assistant finance minister, Ou Wenhan. “We will do a good job of implementing large-scale interest rate reduction and tax deferral and ensure effective implementation as soon as possible,” he said.
The latest measures failed to lift the Shanghai Composite, which lost 0.3 per cent to 3,031.23, though the smaller Shenzhen A-share market jumped 1.4 per cent.
Elsewhere in the region, the S&P ASX/200 in Sydney lost 2.3 per cent to 6,978.30. Hong Kong’s Hang Seng dropped 1.8 per cent to 26,820.88 and Thailand’s SET index lost 2.5 per cent. India’s Sensex lost 1.2 per cent to 40,689.12. Benchmarks in Jakarta, Taiwan and Singapore fell by more than 1 per cent.
Japan’s markets were closed Monday for a holiday.
Hopes that the outbreak had been contained were premature, Mizuho Bank said in a commentary, “and indeed, fears of secondary infections proliferating outside of China have come home to roost, sending risk assets in a tailspin and a wave of refuge-seeking into safe-haven.”
The yield on the 30-year treasury has dipped to record lows as investors sought the safety of U.S. government bonds. It fell to a record low of 1.886 per cent, according to Tradeweb, from 1.98 per cent late Thursday.
The yield on the more closely followed 10-year treasury was at 1.38 per cent. That yield, which is a benchmark for mortgages and other kinds of loans, was close to 1.90 per cent at the start of this year.
Expectations have been building among traders that the Federal Reserve will need to cut interest rates this year to help the economy. They’re pricing in a 90 per cent probability of at least one cut this year, up from an 85 per cent probability a day ago and a 58 per cent probability a month ago.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
