The TSX and New York’s main indices closed down 4.5% Thursday on continuing fears of the coronavirus. It was an ugly session that saw a modest comeback over lunchtime, but selling accelerated towards the closing bell. Every sector of the TSX and the Dow turned red Thursday. For the Dow, it was the fastest 10% correction ever. Crude oil slumped over 4% and even the safe haven of gold slipped 0.26%.
The volume of trading may have caused a technical glitch that halted trading on the TSX before 2 pm. The VIX soared 40%. North American markets are now in correction territory when just a few weeks earlier they were making new highs every day. With cases rising in Italy and Iran, the World Health Organization says the outbreak has reached a “decisive point” and some feel we are verging on a pandemic.
The bleeding was across the board, but tech, energy, airlines and travel were the hardest hit. For example, Apple plunged 6.54%. TD missed expectations and fell 3%. A ray of hope, however, is that for the second day, there were more cases outside China than within. In fact, the number of new Chinese cases is declining, suggesting that the same trend can occur outside Canada in time. So, are markets overreacting? We’ll see.