Canada's main stock index crashed late Monday by the most since 1987 and the currency notched a near three-year low as a drop in prices of oil scared capitalists.
Canadian financial markets were hammered on all sectors as the slide in oil sent jitters through a nation with one of the largest exposures to the key commodity among the elite G7 group.
Canada's stock market settled down over 10 percent to its lowest mark in 14 months, wiping out $218 billion in market value in the worst single-day decline since 1987.
The price of oil, one of the country's major export commodities, dipped as much as 35 percent to its lowest since 2016, at $27.33 per barrel. Canadian assets are "getting pummeled pretty hard because we're witnessing a significant collapse in the price of oil," Colin Cieszynski, head of market strategies at SIA Wealth Management, said.
The Canadian dollar also dropped and government equity yields fell to new lows as investor negativity escalated for an economy that could barely register any growth in the current quarter and is already having trouble with the coronavirus. The loonie was pegged at 73.72 US cents, retreating from 74.51 at the final bell, Friday. In early January the currency was at 77.13 U.S. cents.
North American stock indices have fallen lower as well after managing to slightly recover some of their losses from early Monday sessions. The TSX Composite was down under 15,000 points once more.
In the US, the Dow Jones Industrial Average had declined by more than 7 percent and the S&P 500 Index tumbled around 7.3 percent from Friday's settlement. According to Cieszynski, "we are seeing a phase of the market where it looks like everyone else is selling everything."
The output on Canada's 10-year benchmark plunged to as low as 0.25 percent late Monday and the five-year bond reached 0.26 percent, Bloomberg data showed.
Traders are now betting on the Bank of Canada, which last week trimmed down its interest rate to 1.26 percent, to slash another 50 basis points in its next meeting in April.
Last week, both the Canadian central bank and the US Federal Reserve cut their key rates by 50 basis points. Should the sell-off in oil drag on, these major lenders could decide to ease again without waiting for a policy meeting.
The government is seen to post its budget by the end of March. Canadian Finance Minister Bill Morneau disclosed on Monday that the country is in a "very solid fiscal stance" to handle the uncertainty surrounding the coronavirus, including the oil price drop.
