Equities and oil prices fell through the floor again on Thursday after Donald Trump banned all travel from Europe to the US for a month to fight the coronavirus, ramping up fears the global economy will careen into recession.
As the disease showed no signs of abating, claiming more lives and infecting more people around the world, the US president said in a rare address to the nation that the ban would be in place for 30 days.
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The news came after the World Health Organization officially labelled the outbreak a pandemic and hit out at “alarming levels of inaction” for its spread.
Asian equity markets, already deep in the red in reaction to the WHO announcement, cratered after Trump’s address.
Tokyo, Hong Kong, Seoul, Singapore and Jakarta all lost more than three percent, while Sydney, Manila and Mumbai plunged more than six percent and Bangkok collapsed more than eight percent.
Wellington was five percent down and Taipei gave up more than four percent. Shanghai was down 1.5 percent.
The Japanese yen, a key haven in times of crisis and economic turmoil, jumped more than one percent against the dollar.
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“Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell… after a massively negative signal from trading in US markets it just fell in your lap,” said AxiCorp’s Stephen Innes.
The losses followed another brutal session on Wall Street, with wave after wave of bad news, including Hilton withdrawing its earnings forecast and Boeing saying it would suspend most hiring and overtime pay.
The Dow fell into a bear market having lost more than 20 percent since its recent high, and futures pointed Thursday to another rout in New York and Europe.
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The coronavirus outbreak has left virtually no sector untouched, though travel and tourism have been particularly hard-hit as countries institute travel bans and quarantine requirements, with Italy in a country-wide lockdown.
The number of cases across the globe has risen to more than 124,000 with 4,500 deaths, including a jump in fatalities particularly in Iran and Italy, according to an AFP tally.
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In announcing the Europe ban — which excludes Britain — Trump said the continent had seen a surge in new cases because governments failed to stop travel from China, where the COVID-19 epidemic began.
He said the prohibitions would also “apply to the tremendous amount of trade and cargo,” and “various other things as we get approval”.
However, the White House afterwards clarified that “the people transporting goods will not be admitted into the country, but the goods will be”.
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Oil prices were also hammered, with both main contracts falling around six percent at one point before edging back slightly. The oil market was already under pressure after Saudi Arabia and Gulf partner UAE stepped up a price war with plans to flood the global markets.
“We are now staring at the whole world going into a lockdown,” Vandana Hari, of Vanda Insights, said. “Oil demand can be expected to crash through the floor and all previous projections on oil consumption are now out the door.”
The Saudi move was the latest escalation of a fight among oil producers after Russia balked at an OPEC-backed plan to cut production in response to lost demand because of the coronavirus.
“Markets are crying out for a co-ordinated response to COVID-19 headwinds and a lack of concrete US policy action is rattling markets,” said Tapas Strickland, senior analyst at National Australia Bank.
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Trump’s address included several measures intended to ease the financial burden particularly for small business, including payroll tax relief and deferred tax payments.
But he did not unveil any large-scale tax cuts, which OANDA’s Jefrey Halley said “has probably disappointed markets more than anything”.
Katrina Ell, senior Asia-Pacific economist at Moody’s Analytics, said the overall economic toll of the crisis has yet to be determined.
“While a health epidemic typically brings a strong revival in activity after containment, the COVID-19 outbreak has not reached that point, and the economic toll has increased,” she said in a note.
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The bloodbath across global trading floors has come despite a raft of measures by governments worth at least $150 billion to offset the impact of the disease, while central banks will be called upon to cut already low interest rates and introduce other fiscal measures.
German Chancellor Angela Merkel has said she will do “whatever is necessary” to help the economy, while the European Central Bank is to hold a policy meeting later in the day at which it is under pressure to open up the taps.
Tokyo – Nikkei 225: DOWN 3.7 percent at 18,687.12
Hong Kong – Hang Seng: DOWN 3.5 percent at 24,351.78
Shanghai – Composite: DOWN 1.5 percent at 2,925.24
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Brent North Sea crude: DOWN 4.6 percent at $34.16 per barrel
West Texas Intermediate: DOWN 4.6 percent at $31.48 per barrel
Dollar/yen: DOWN at 103.90 yen from 104.54 yen
Euro/dollar: UP at $1.1300 from $1.1276 at 2100 GMT
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Pound/dollar: DOWN at $1.2814 from $1.2825
Euro/pound: UP at 88.15 pence from 87.91 pence
New York – Dow: DOWN 5.9 percent at 23,553.22 (close)
London – FTSE 100: DOWN 1.4 percent at 5,876.52 (close)
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
