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A whole year has gone by since all hell broke loose in form of the COVID-19 outbreak and threw a wrench into life as we knew it. Everything, starting from world economies to trivial daily chores, changed quickly after the World Health Organization (WHO) declared the global pandemic. And while a lot has improved since, it’s been hard to forget the March lows of 2020.
But in case you did, here’s a quick look back of the COVID-19 impact on stock markets over the past year.
When COVID Hit Stock Markets Last March
Even before the WHO officially declared the pandemic, fear had begun crawling up on investors by late February 2020. The novel coronavirus that had erupted in China’s Wuhan around December 2019 was cropping up all over the world and spreading fast. It was only a matter of time before the health crisis began taking a toll on global financial markets.
©Kalkine Group 2020
On the day of the WHO declaration, Canada’s S&P/TSX Composite Index tumbled by about 20 per cent from its February high of C$17,944.1 to close at C$ 14,270. The following day, however, was worse.
The pandemic news, which was quickly being followed by lockdown announcements, had fanned investor panic to ragging proportions in a day’s time. As a result, March 12, 2020, went down in history for recording the largest one-day plunge the Toronto Stock Exchange (TSX) has seen since 1940 – a decline of over 12 per cent.
As nationwide lockdowns swept the world in the following days, most sectors were steamrolled. The energy industry suffered majorly due to the operational disruptions and the raging oil price war, leaving its stocks to plummet by about 30 per cent in March. The aviation industry, meanwhile, had its wings clipped by the international travel bans.
©Kalkine Group 2020
A handful of sectors, however, boomed amid the historic stock market crash of March-April 2020. Investors who were dropping stocks like hot coal were rushing to the refuge of gold assets, triggering a massive demand for the entire industry.
At the same time, as being locked up at home became the new normal, technology became a lifeline a majority of the population. The demand for online shopping, remote working applications, virtual games, digital payment, omnichannel services for businesses, etc ballooned in the months of March and April. And as this boosted the sector, tech stocks too rose to record heights.
With the Bank of Canada slashing interest rates to ease the pressure on people, the housing market also began inflating. Although it wouldn’t reach record levels until much later.
By the time 2020 reached its last quarter, investors had begun testing the waters with struggling companies. Stocks of Suncor Energy (TSX:SU) grew nearly 32 in the three months ending December 31, while Air Canada shares jumped about 45 per cent. Canada’s cannabis sector too was rising around this time, but US President Joe Biden’s campaign and victory south of the border had a lot to do with it.
Canada’s stock markets have come a long way since the March lows of 2020. The S&P/TSX Composite Index, which hit a record low of C$ 12508.5 on March 12, 2020, rose nearly 51 per cent over a year to close at an all-time high of C$ 18844.6 on March 11, 2021. The benchmark index also currently posts a year-to-date growth of about eight per cent. But in the world of stock trading, you never know what tomorrow may bring.
