Canada markets closed

North American stock markets roar back to life on hopes of stimulus, virus signs

TORONTO — North American stock markets roared back to life Tuesday on hopes of a massive U.S. government stimulus package and positive data from Italy regarding the novel coronavirus outbreak.

The S&P/TSX composite index closed up 1,342.59 points or almost 12 per cent at 12,571.08.

In New York, the Dow Jones industrial average enjoyed its largest daily gain since 1933 by rising 2,112.98 points or 11.3 per cent at 20,704.91. The S&P 500 index was up 209.93 points at 2,447.33, while the Nasdaq composite was up 557.18 points at 7,417.86.

The steep climbs came after some volatile days of trading that has seen the TSX lose about 40 per cent of its value since posting record highs about a month ago.

"You've got to put this in context. We've had some horrific days preceding today," said Natalie Taylor, a portfolio manager with CIBC.

After two failed attempts to reach a US$2 trillion stimulus package, the U.S. Congress appears to be getting close to reaching a deal. That's on top of the Federal Reserve cutting interest rates a number of times and agreeing Monday to unlimited quantitative easing.

"I think that there's some view that we've had the start of a capitulation in the market," she said, referring to a final purge of quality names that's typical of the latter stages of a selloff.

Adding to hopes are signs that the number of new confirmed COVID-19 cases and deaths is starting to taper off in Italy, pointing to a positive outlook for North America.

"I think that that is a positive given the efforts that have been put into trying to contain populations and quarantine and social distance that maybe there's a glimmer of hope that we're closer to the end and there's a road map for other jurisdictions."

However, Taylor is loathe to call the bottom given the number of times markets have fallen after posting a rebound.

"So I'm not going to speculate as to whether we would hit the bottom or what tomorrow is going to look like. I just know, after a number of consecutive days of selloff, it's not unusual to have a strong interim rebound or a bear market rally."

Even if there's a control of the number of coronavirus cases, the longer-term implications remain serious as most economists are calling for a recession.

"I think that we're going to see some longer term volatility and maybe more downside in the near term before we start that road to recovery."

The Canadian dollar traded for 69.01 cents US compared with an average of 69.05 cents US on Monday.

All 11 major sectors on the TSX closed substantially higher, led by consumer discretionary, financials, materials, utilities and energy.

Consumer discretionary climbed 13.6 per cent as Magna International Inc. increased by nearly 20 per cent.

The heavyweight financials sector gained 13.4 per cent with Power Corp. of Canada up 20.5 per cent and Manulife Financial Corp. increasing 20.1 per cent.

A surge in gold and copper prices helped materials to gain 12.5 per cent as First Quantum Minerals Ltd. was up 41.9 per cent.

The April gold contract was up US$93.20 at US$1,660.80 an ounce and the May copper contract was up 7.95 cents at US$2.18 a pound.

The May crude contract was up 65 cents at US$24.01 per barrel and the May natural gas contract was up 5.6 cents at US$1.73 mmBTU.

Despite the modest gain in crude, the energy sector was up 11.3 per cent with Whitecap Resources Inc. and Suncor Energy Inc. rising 23.9 and 13 per cent respectfully.

A nearly 30 per cent gain by Chorus Aviation and 19 per cent increase by Air Canada helped industrials.

This report by The Canadian Press was first published March 24, 2020.

Companies in this story: (TSX:CHR, TSX:AC, TSX:FM, TSX:POW, TSX:MFC, TSX:WCP, TSX:SU, TSX:MG, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press