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The collapse of crude oil prices and the global spread of the novel coronavirus delivered a double blow to investors on Monday, skewering stocks and raising alarms about the health of Canada’s struggling energy sector.
The result was the worst one-day drop in the Canadian stock market since the crash of October, 1987. The S&P/TSX Composite Index sank 1,660.78 points, or 10.27 per cent, to 14,514.24.
The TSX drop was among the worst in a global rout. The S&P 500 fell 7.6 per cent, after trading was briefly halted early in the day owing to the sudden drop, bringing the total decline since Feb. 20 to 18.9 per cent. It marked the index’s biggest one-day decline since December, 2008, during the depths of the financial crisis. Britain’s FTSE 100 fell 7.7 per cent and Japan’s Nikkei 225 fell 5.1 per cent.
But those declines pale in comparison to free-falling crude oil prices, which plummeted more than 25 per cent – the biggest decline in nearly three decades – after Saudi Arabia announced plans to increase oil production in a bid to secure market share.
“Today’s price action puts at risk the fiscal health of the vast majority of sovereign producers and budget cuts and increased debt loads are now looming in the event of a prolonged period of low prices,” Helima Croft, global head of commodity strategy at RBC Dominion Securities, said in a note.
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