Stock markets rebounded somewhat on Friday, a day after their worst day in decades. (Simon Dawson/Reuters)
The unprecedented volatility on the stock market continued on Friday as the benchmark index of the Toronto Stock Exchange moved into positive territory a day after its worst loss ever.
Thursday was the worst day for the TSX in decades, as the benchmark index lost 12 per cent of its value. Fears of the coronavirus prompted the sell-off, but on Friday buyers seemed to be thinking the market may have overreacted.
Prior to the market opening, the futures market was so strong that the market was temporarily shut down to restore order.
When that shutdown was lifted, the TSX in Canada, and the S&P 500, the Dow Jones and the Nasdaq in the U.S. were all up by between five and six per cent.
Investors can’t seem to shake the fear and uncertainty over what the coronavirus will do to the North American economy, as the number of cases of the virus that causes COVID-19 escalates rapidly.
The Canadian government recommended that citizens cancel all non-essential travel outside the country on Friday. Ottawa also unveiled a stimulus package for the Canadian economy later in the afternoon.
Finance Minister Bill Morneau is set to speak to reporters at 2 pm. It’s anticipated he will make a significant announcement to help stabilize the economy during the covid-19 outbreak.
The stock market gains were a relief to investors who have seen several years worth of returns on the TSX wiped out in a matter of days.
“Recall that the index was at an all-time high as recently as three weeks ago to the day,” BMO economist Doug Porter said. “Markets have already built in a very severe blow to the economy.”
Investment portfolios have been