The Toronto Stock Exchange plunged more than 600 points on Monday, in a broad-based decline fueled by falling commodity prices, as investors continued to worry about the effects of interest rate hikes and COVID-19 on the Chinese economy.
This decline, which also affected to some extent the US indices, is a continuation of the pressure suffered by the markets in recent weeks, observed Craig Fehr, investment strategist for the firm Edward Jones. “Markets are struggling to adjust to an environment in which central banks in general, but perhaps especially the Fed, are expected to continue to tighten [leur politique monétaire] in an economy that is showing some wear and tear. »
The S&P/TSX Composite Index had been somewhat insulated from the trend earlier this year thanks to rising commodity prices, but saw declines in major resources on Monday amid investor concerns. The Toronto floor’s flagship index erased 633.59 points, or 3.1%, to end the day at 19,999.69 points.
In New York, the broad S&P 500 index lost 132.10 points, or 3.2%, to 3,991.24 points, while the Nasdaq Composite Index lost 521.41 points, or 4.29%, at 11,623.25 points.
On the New York Commodities Exchange, crude oil fell US$6.68 to US$103.09 a barrel, while natural gas fell US$1.02 to $7.03. US per million BTU.
Stock markets were weighed down by a combination of headwinds for growth on Monday, including the health situation in China, which sent the price of oil plummeting. Chinese authorities extended restrictions to Beijing on Monday, where millions of residents were working from home, and Shanghai remains in lockdown.
“The Chinese authorities’ stubborn pursuit of the ‘zero COVID’ policy raises concerns about the crippling effect it will have on the Chinese economy in the months ahead,” said CMC Markets analyst Michael Hewson. He points out that “problems on supply chains” persist in this context and could have “disastrous consequences on growth prospects”.