TSX Ends Sharply Lower As Stocks Plunge On Fears Of Deep Recession

(RTTNews) - Canadian shares tumbled on Wednesday as worries about the economic impact of the ongoing coronavirus pandemic mounted after the U.S. Federal Reserve Chief Jerome Powell warned of a prolonged recession.

During a webcast hosted by the Peterson Institute for International Economics, Powell warned the coronavirus crisis raises longer-term concerns that could result in an extended period of low productivity growth and stagnant incomes.

Powell's views are largely in line with several economists who have predicted the economy is unlikely see a v-shaped recovery.

Powell said the central bank may take additional steps to support the economy but is not considering adopting negative interest rates.

Noting that the economic outlook is "both highly uncertain and subject to significant downside risks," the Fed chief suggested it may be necessary for the U.S. Congress to provide additional stimulus.

The trend was bearish across global markets and Canada was no exception.

The Canadian benchmark S&P/TSX Composite Index ended down 377.95 points, or about 2.5%, at 14,503.21, just a few points off the session's low of 14,892.12.

Selling was so widespread that all the sectoral indices ended in red. The Capped Healthcare index, which declined 5.78%, was the biggest loser. The Energy Index shed 5.63%, while the Financial and Consumer Discretionary indices went down by 3.86% and 3.77%, respectively.

Utilities, real estate, industrial, telecom and consumer staples stocks too tumbled, dragging the respective indices down by 1.8 to 3.2%. The Capped Materials Index shed a modest 0.44%, while the Information technology index edged down 0.18%.

Bank of Montreal (BMO.TO), Bank of Nova Scotia (BNS.TO), Toronto-Dominion Bank (TD.TO), Royal Bank of Canada (RY.TO) and Canadian Imperial Bank of Commerce (CM.TO) lost 2.5 to 5.1%.

In the energy section, Husky Energy (HSE.TO), Vermilion Energy (VET.TO), Crescent Point Energy (CPG.TO), Seven Generations Energy (VII.TO) and Enerflex (EFX.TO) lost 8 to 10%.

Parex Resources (PXT.TO), Imperial Oil (IMO.TO), Cenovus Energy (CVE.TO), Enerplus (ERF.TO), Canadian Natural Resources (CNQ.TO) and Arc Resources (ARX.TO) also declined sharply.

In the healthcare space, Aurora Cannabis (ACB.TO) declined 8.7% and Canopy Growth (WEED.TO) lost nearly 8%. Aphria (APHA.TO) and Cronos Group (CRON.TO) both ended lower by about 6%.

Among other major losers in the session, Air Canada (AC.TO) declined nearly 8%, Manulife Financial Corp (MFC.TO) shed 4.1%, West Fraser Timber (WFT.TO) lost 8.1%, Canadian Tire Corporation (CTC.A.TO) declined 5.3% and Onex Corp (ONEX.TO) ended 4.5% down.

On Wall Street, stocks plunged sharply and pushed the major averages down to a very weak close. The Dow tumbled 2.2%, the Nasdaq slumped 1.6% and the S&P 500 ended 1.8% down.

Reaction to Powell's comments about the economic outlook and interest rates sent stock prices tumbling on Wall Street.

Major European markets ended sharply lower and markets across the Asia-Pacific region turned in a mixed performance.