Stocks, commodities, bond yields and the Canadian dollar fell sharply in one of the most severe setbacks for financial markets since the rollout of COVID-19 vaccines earlier this year, raising questions about whether the global economic recovery is stumbling.
The turbulence follows strong gains over the past year that lifted a number of equity benchmarks to record highs as recently as last week.
But the rallies stretched stock valuations to their highest levels since the technology bubble of the 1990s, even as central banks considered withdrawing extraordinary stimulus and some observers warned that economic growth may have already peaked – making stocks sensitive to a downturn.
“The market has been marching up non-stop,” Stephen Takacsy, chief executive officer of Montreal-based Lester Asset Management, said in an interview.
“It’s one thing to go up on the rebound after such a sharp collapse last year. But it’s another thing to keep marching forward on an overly optimistic scenario of recovery,” Mr. Takacsy added.