Welcome Back, Toronto Traders, After You Missed Brutal Sell-Off
(Bloomberg) -- Equity desks across Toronto floors are bracing for an ugly start as Canada’s main stock exchanges come back online after a technical glitch that shut operations two hours early yesterday.
Bourses operated by TMX Group Ltd. halted trading shortly before 2 p.m. Eastern time on Thursday and did not re-open. The S&P/TSX Composite Index was down 1.9% at the time as coronavirus anxiety enveloped global markets and accelerated an afternoon sell-off.
The exchanges had seen 660 million shares traded up to that point, according to TMX Group’s website. In the first three days of the week, investors traded an average of 305 million shares a day in TSX Composite stocks, according to data compiled by Bloomberg. That is 41% higher than the average daily volume in the three months ended Feb. 26.
All systems are now ready for the start of business Friday, TMX Group said. The interruption was caused by a system capacity issue within the messaging technology component of TMX’s trading engine. The bourse said it has undertaken necessary measures to mitigate the risk of recurrence and that the incident was not the result of a cyber-security attack.
If trading had continued for all of Thursday, the rout may have deepened in the nation’s equity market. The biggest U.S.-listed ETF for Canadian stocks, iShares MSCI Canada ETF, closed 2.2% lower.
South of the border, S&P 500 plunged 4.4% Thursday, its worst day since 2011, taking equities into a correction. American depository receipts of Canadian companies slumped in U.S. trading -- Royal Bank of Canada, Toronto-Dominion Bank and Enbridge Inc., making up more than 15% of the Canadian benchmark, plummeted in New York.
Futures contracts on the S&P/TSX 60 plunged as much as 3% on Friday. This comes as the global market tumult continued with stocks across Europe and Asia nosediving and investors sought safe assets, sending Treasury yields to new depths.
Canadian stocks had been holding up fairly well at the start of the outbreak buoyed by safe-haven gold producers. But with the economic impact of the virus spreading, the nation’s market lost over $132 billion value since the slump began last week as the 30-year government bond yield dropped to a record low and the loonie weakened.
“Our concern is that the disruption of the supply chain doesn’t just get switched on again,” Jay Jacobs, head of research and strategy at Global X Management said in an interview at Bloomberg’s Toronto office. It can take weeks to get back on track and that’s why the coronavirus is especially detrimental to the miners and resource companies that populate Canadian exchanges.
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