A temporary halt kicked off trading on the Canadian markets Thursday morning (March 12) following a 1,300-point plunge on the S&P/TSX Composite Index.
Circuit breakers were triggered moments after markets opened across North America at 6:30 a.m. PT, putting a holding on trading on markets like the TSX and TSXV.
Trading resumed shortly before 7 a.m. — down more than 1,500 points since opening.
The sell-off comes the morning after U.S. President Donald Trump announced unprecedented restrictions on air travel from Europe in a bid to stave off the COVID-19 pandemic.
Trading was also halted temporarily on American markets.
It’s the second time trading as been paused in North America in the past week, in a bid to ease major sell-offs.
Benchmark oil prices, meanwhile, had fallen 4% by 7:20 a.m. PT, with West Texas Intermediary trading at $32.98.
“With coronavirus, people are clearly not travelling and goods are moving less. So we need less oil,” Andrey Pavlov, a finance professor at Simon Fraser University’s Beedie School of Business, told the BIV Today podcast earlier this week.
“Now Canada is obviously highly exposed to that because oil is still a very significant sector of our economy. And when oil prices drop that does have implications for all of Canada.”
The loonie, which sees its fortunes wax and wane with that of oil prices, was down 0.23% to trade at 72.38 cents vs. the greenback.
“Markets were probably getting overextended before the outbreak and a correction of some sort was probably coming anyway,” Pavolov said.
“We’ve had a fantastic run in the stock markets for two or three years, maybe four. And with that kind of run inevitably there’s going to be some pullback at some point. And it’s possible that the outbreak was just a catalyst to bring that pullback right now.”
He said that diminished travel and visits to restaurants are likely putting the brakes on the economy right now.
But Pavlov added that the recent plunges are not concerning for long-term growth in the economy.
What’s unclear, though, is exactly how long the short-term losses will mount.
