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North American stock markets fall to cap worst trading week since 2008


TORONTO — North American stock markets closed lower Friday to cap the worst trading week since the global financial crisis.

After starting the day stronger, markets dropped to end the week down by double digits compared to last week.

Other than last week's strong push at closing on U.S. President Donald Trump's promise of a massive stimulus program, markets have been down every Friday of the year, said Greg Taylor, chief investment officer of Purpose Investments.

"That's just more of a sense of nervousness that investors are saying: 'Well, I don't really want to be long everything over the weekend in case things get more worse,'" he said.

The S&P/TSX composite closed down 318.71 points, or 2.6 per cent, to 11,851.81. The market lost 1,865 points or 13.6 per cent in one week and is down 34 per cent off the record high set last month.

In New York, the Dow Jones industrial average was down 913.21 points, or 4.5 per cent, at 19,173.98 to a level that wiped out all the gains since Trump took office. The S&P 500 index was down 104.47 points at 2,304.92, while the Nasdaq composite was down 271.06 points at 6,879.52.

Trading was influenced by it being quad witching, the third Friday of each month when all options expire. Friday also marked the quarterly rebalancing which tends to be the most volatile day of the year, Taylor said.

"So the fact that it's happening in this volatile market already, I think, has added another dimension to this," he said.

"But traditionally, once you get through this, then you can be potentially set up for a bit of a bounce."

The Canadian dollar traded for 69.77 cents US, down three per cent on the week, and compared with an average of 68.99 cents US on Thursday.

Eight of the 11 major sectors on the TSX were lower led by materials, telecommunications and industrials.

The key materials sector was down 5.7 per cent with shares of Oceanagold Corp. and Alamos Gold Inc. falling 18.3 and 16.7 per cent respectively.

They decreased even though the April gold contract was up US$5.30 at US$1,484.60 an ounce and the May copper contract was down 1.4 cents at US$2.17 a pound.

Industrials was lower despite Air Canada shares climbing 2.1 per cent after it laid off more than 5,000 flight attendants as a result of slashing capacity because of COVID-19.

The airline's shares have been battered by the response to the novel coronavirus. Its move higher could be a sign that investors are feeling the selling has gone too far, said Taylor.

"And when people are starting to do the fundamental analysis to realize that this is not the end of the world to all these sectors and things start to rebound, that's a really good sign that sentiment is starting to change and people are starting to have sober second thoughts," he said. 

The energy sector gained with Baytex Energy Corp. up 15 per cent despite lower crude prices.

The May crude contract was down US$3.28 at US$22.63 per barrel after gaining more than 24 per cent on Thursday. The May natural gas contract was down 5.1 cents at US$1.675 per mmBTU.

Crude oil prices fell by nearly 29 per cent during the week on concerns about weakened demand as people stay home to prevent the virus from spreading, and increased supply due to a price war between Saudi Arabia and Russia.

Notwithstanding Friday's trading, the market feels calmer with more people calling looking to put money to work, Taylor said.

The tricky part for investors is trying to determine how much of the bad news is already priced in.

He said investors have to look beyond the sad news of rising virus infections and deaths.

"It's important to remember that markets are supposed to be forward looking. And markets tend to turn before the actual stats start to turn."

This report by The Canadian Press was first published March 20, 2020.

Companies in this story: (TSX:OGC, TSX:AGI, TSX:AC, TSX:BTE, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

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