TORONTO -- Canada's main stock market fell amid concerns that a spreading coronavirus could hamper the world economy and demand for crude oil.
"There are concerns starting to emerge that this might have an impact on economic growth, certainly in China but perhaps beyond that," said Kevin McLachlan, portfolio manager at Fiduciary Trust Canada.
China is now so linked to the global supply chain that even North American companies may see an impact if there's a slowdown in Chinese factories or supply chains, he said.
One forecaster predicted that China's GDP rate could drop to 4.5 per cent in the first quarter, down from six per cent, McLachlan said.
Meanwhile, the U.S. GDP rate is already slow, slipping to 2.1 per cent on an annualized basis in the fourth quarter and hitting its slowest pace in three years in 2019. Consumer spending decelerated to 1.8 per cent, the weakest since the first quarter of 2019.
The coronavirus is not going to help market sentiment, he said, noting that up to 70 per cent of the U.S. economy is dependent on consumer spending.
"If that starts to pull back in the U.S. that could have a significant effect on U.S. GDP," he said in interview.
The virus hit a key threshold Thursday as the infection of more than 8,100 people globally surpassed the total reached during the SARS epidemic in 2002-2003.
On top of that, the United States and South Korea confirmed their first cases of person-to-person spread of the virus.
The World Health Organization declared the outbreak of the new virus to more than a dozen countries as a global emergency Thursday after the number of cases spiked more than tenfold in a week. China has reported more than 7,800 cases including 170 deaths.
However, the declaration didn't cause the market selloff, said McLachlan, noting that markets fell in the morning before the declaration was made.
The S&P/TSX composite index closed down 21.19 points at 17,490.56 after two days of modest gains..
In New York, the Dow Jones industrial average recovered near the end of day to gain 124.99 points at 28,859.44. The S&P 500 index was up 10.26 points at 3,283.66, while the Nasdaq composite was up 23.77 points at 9,298.94.
The Canadian dollar hit a seven-week low by trading for 75.66 cents US compared with an average of 75.78 cents US on Wednesday.
Eight of the 11 major sectors of the TSX closed lower on the day, led by health care.
The key materials and energy sectors also fell.
Materials declined with First Quantum Minerals Ltd. down 4.1 per cent despite higher gold prices.
The April gold contract was up US$13.20 at US$1,589.20 an ounce and the March copper contract was down three cents at US$2.52 a pound.
Energy dropped as crude oil prices hit their lowest level in nearly six months on worries about global demand while the airline sector continues to be hit by the impact of the virus.
The March crude contract was down US$1.19 at US$52.14 per barrel and the March natural gas contract was down 3.6 cents at US$1.83 per mmBTU.
Industrials was the biggest gainer on the day as shares of Canadian Pacific Railway Ltd. and Canadian National Railway Co. gained 1.95 and 1.23 per cent respectively. Utilities also climbed higher while technology was unchanged.
This report by The Canadian Press was first published Jan. 30, 2020.
