Canada’s S&P/TSX Composite Index closed down 447.37 points, or 2.94 per cent, at 14,780.74, in a broad selloff even in the face of a surge in the price of crude oil.
The news on the domestic front provided little encouragement for investors to extend this month’s surge in stocks: Canada’s GDP reading for February was essentially flat, suggesting economic weakness even before shutdowns related to the coronavirus arose in March. Meanwhile, Parliament’s budget watchdog warned that a dramatic contraction was possible this year, with a spike in deficit and debt levels.
Financials were among the hardest hit, with the TSX Composite Banks Index falling 3.67 per cent. Even with the price of crude oil surging, the TSX Energy Capped Index lost 2.28 per cent. Materials lost 3.71 per cent as gold fell.
Wall Street also ended lower, although its losses were tamer, as investors grew more cautious after the powerful rally over the last few weeks. Another big number in jobless claims down south suggested it’ll be a long road to recovery.
Oil prices jumped after several producers said they would cut output and as signs the U.S. crude glut was not growing as quickly as many had feared brought an upbeat close to one of the most volatile months for oil trading in history.
On its last day as the front-month, Brent futures for June delivery rose $2.73, or 12%, to settle at $25.27 a barrel, while U.S. West Texas Intermediate (WTI) crude for June rose $3.78, or 25%, to settle at $18.84.
That was the highest close for Brent since April 20 and WTI since April 16.
Volume in WTI futures on the New York Mercantile Exchange hit around 36 million contracts in April, which Refinitiv data puts as second only to the previous month’s 40.9 million record.
Western Europe’s largest oil producer, Norway, said it would lower output from June to December, cutting production for the first time in 18 years as it joined other major producers’ efforts to support prices and curb oversupply.
Royal Dutch Shell Plc, meanwhile, announced its first dividend cut since World War Two.
U.S. oil and gas company ConocoPhillips said it would sharply reduce oil production in coming weeks, aiming to shut in 35% of its total output by June.
Russian gas producer Novatek PAO said it plans to cut capital expenditure by a fifth this year, mainly for developing its oil projects, a company manager said on Thursday.
U.S. crude inventories grew by 9 million barrels last week to 527.6 million barrels, Energy Information Administration data showed, below the 10.6 million-barrel rise analysts had expected in a Reuters poll.
Storage concerns, however, continue to weigh with the International Energy Agency saying global capacity could peak by mid-June.
U.S. President Donald Trump said his administration would soon release a plan to help U.S. oil companies.
Nine companies including Chevron Corp and Exxon Mobil Corp have agreed to rent space to store 23 million barrels of crude in the U.S. emergency oil reserve.
But for U.S. stocks Thursday, grim economic data and mixed earnings prompted investors to take profits at the close of the S&P 500’s best month in 33 years, a remarkable run driven by expectations the economy will soon start recovering from crushing restrictions enacted to curb the coronavirus pandemic.
While risk-off selling pulled all three major U.S. stock averages into the red, the S&P 500 and the Dow posted their largest monthly percentage gains since January 1987, with the Nasdaq having its best month since June 2000.
The three indexes remain well within 20% of record highs reached in February, having quickly rebounded since shutdown efforts to curb the spread of the coronavirus pandemic brought the economy to a grinding halt.
The five-week tally of unemployment claims topped 30 million and consumer spending has plummeted, according to the latest round of dismal indicators providing another snapshot of the crushing economic effects of the widespread shutdown.
“We’ve had a tremendous run but we’ve had the worst economic data since the Great Depression,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Business and earnings might not be snapping back as quickly as the v-shaped recovery on Wall Street would imply.”
The Federal Reserved announced that it would broaden its “Main Street Lending Program” by lowering the minimum loan size and expanding eligibility.
“Wall Street is liking all the programs that the government and the Fed are putting together,” Nolte added. “So Wall Street is doing fine but Main Street is going to be a longer process.”
The Dow Jones Industrial Average fell 288.14 points, or 1.17%, to 24,345.72, the S&P 500 lost 27.08 points, or 0.92%, to 2,912.43 and the Nasdaq Composite dropped 25.16 points, or 0.28%, to 8,889.55.
Of the 11 major sectors in the S&P 500, all but consumer discretionary and communications services closed in negative territory, with materials and financials suffering the largest percentage losses.
Earnings season continues apace, with 236 of the companies in the S&P 500 having reported quarterly results. Of those, two-thirds have surprised consensus estimates to the upside, according to Refinitiv data.
But there have been 90 negative pre-announcements in the first quarter, compared with 40 positive, and analysts see aggregate S&P 500 earnings dropping by a year-on-year rate of 14.4% in the first three months of 2020, per Refinitiv.
Market leaders Apple Inc and Amazon.com reported results after the closing bell. In post-market trading, Apple shares gained more than 2% while Amazon.com was down over 5%.
Facebook Inc climbed 5.2% after the social media company reported better-than-expected quarterly revenue.
American Airlines posted its first quarterly loss since emerging from bankruptcy in 2013, sending its shares down 4.9%.
Read more: Market movers: Stocks that saw action on Thursday - and why
Reuters, Globe staff
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