Canada's main stock market snapped a three-day winning streak on Friday and domestic bond yields plunged as investors grew edgier about the coronavirus pandemic and the Bank of Canada slashed interest rates to near zero.
The Toronto Stock Exchange's S&P/TSX composite index closed down 5.1% at 12,687.74. Shares globally also declined on mounting investor concerns about the fast-spreading disease, despite hopes for further stimulus measures to combat its economic impact.
"What we are seeing out of the TSX is a resumption of the bear market," said Philip Petursson, chief investment strategist at Manulife Investment Management. "I think it is far too early to call a bottom on this market yet."
On Monday, the TSX hit an eight-year low at 11,172.73. Still, it notched a weekly gain for the first time in six weeks, ending up 7.1%.
Canada said on Friday it will cover 75% of wages for small businesses and the Bank of Canada cut its key interest rate by 50 basis points to 0.25%, its lowest level in a decade, as officials sought to limit layoffs and bolster an economy hard hit by the coronavirus pandemic.
Some economists have said Canada's economy could he hit particularly hard because Canadian households are carrying record levels of debt and Canada is a major exporter of commodities, including oil.
The Canadian dollar was trading 0.3% higher at 1.3983 to the greenback, or 71.52 US cents, after initially weakening on the rate cut. The loonie touched its strongest intraday level since March 16 at 1.3922.
For the week, the loonie was up 3.1%, its biggest weekly gain since October 2009. Some of that rally could have been due to short covering. Data from the US Commodity Futures Trading Commission showed speculators had raised bearish bets on the loonie as of Tuesday to the most since June last year.
Canadian government bond yields fell across the curve on Friday. The two-year slumped 16.6 basis points to 0.446%, while the 10-year was down 12.2 basis points at 0.720%.