TSX, Canadian dollar start new quarter defensively as coronavirus hurts economy

TORONTO (Reuters) - Canada’s main stock market and the loonie fell on Wednesday, with investors resuming a defensive crouch at the start of the second quarter as factory data showed some of the clearest evidence yet of economic damage from the coronavirus pandemic.

Monitors display the S&P AND TSX composite index in the financial district as the number of novel coronavirus cases continues to grow in Toronto, Ontario, Canada March 16, 2020. REUTERS/Carlos Osorio

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) fell to a seasonally adjusted 46.1 in March, the lowest in at least nine years. It indicated a contraction in factory activity, which was also the case in U.S. and European manufacturing data.

Adding to the alarm was a rising death toll from the virus outbreak in Canada, which jumped by 35% to 89 in less than a day on Tuesday.

Canadian Prime Minister Justin Trudeau said on Wednesday he wanted to recall Parliament so legislators could approve a massive aid package he called “the biggest economic measures of our lifetimes.”

Ottawa is rolling out more than C$200 billion ($141 billion) in support for Canada’s economy, including direct aid to Canadians, wage subsidies for businesses, loan programs and tax deferrals, while the Bank of Canada has slashed interest rates to nearly zero and is buying government bonds in large quantities, known as quantitative easing.

he Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 3.8% at 12,876.37, with shares of security software company BlackBerry Ltd BB.TO falling nearly 18% after dismal quarterly results.

The TSX fell about 22% in the first quarter, its biggest decline since 2008, but had showed some signs of steadying in recent days.

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the Canadian dollar tends to be sensitive to the flow of global trade and capital.

U.S. crude oil futures CLc1 settled 0.8% lower at $20.31 a barrel after data showed U.S. crude inventories rose last week by the most since 2016.

The loonie CAD=D4 was trading 1.1% lower at 1.4218 to the greenback, or 70.33 U.S. cents. The currency traded in a range of 1.4065 to 1.4272.

Canadian bond yields fell across a flatter curve, with the 10-year down 6.6 basis points at 0.629%.

($1 = 1.4213 Canadian dollars)

Reporting by Fergal Smith; Editing by Peter Cooney