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TSX Shed Over 5% As Virus Fears Trigger Sell-off

The Canadian stock market ended sharply lower on Friday as fears of a global recession and rising worries about the coronavirus pandemic outweighed massive stimulus measures from central banks and governments, and prompted investors to cut down positions.

Weak commodity prices knocked the wind out of energy and materials shares and contributed substantially to market's sharply lower close.

The Bank of Canada cut its key interest target by half a percentage point to 0.25% in an unscheduled rate announcement this morning.

The central bank said its decision to lower rates is aimed at cushioning the economic shocks from COVID-19 and a sharp drop in oil prices by easing the cost of borrowing. The bank added that providing credit in the economy for businesses that need it should help lay the foundation for the economy's return to normalcy.

The benchmark S&P/TSX Composite Index ended down 633.43 points, or 5.11%, at 12,687.74, not far off from the day's low of 12,630.27.

Still, thanks to big gains it recorded in two of the three sessions it closed higher this week, the index posted a weekly gain of almost 9%.

The Capped Energy Index shed about 9.4%, as several stocks in the section plunged sharply and recorded big losses.

The Capped Materials Index ended 6% down, while the Consumer Discretionary, financial and information technology indices lost 5 to 5.4%. Industrial, utilities, consumer staples and telecommunications shares also recorded sharp losses.

Cenovus Energy (CVE.TO), Canadian Natural Resources (CNQ.TO), Suncor Energy (SU.TO), Kinross Gold (K.TO), Yamana Gold (YRI.TO), B2Gold Corp (BTO.TO), Power Corporation of Canada (POW.TO), Enbridge Inc. (ENB.TO), Manulife Financial (MFC.TO) and Air Canada (AC.TO) lost 6 to 12%.

In economic news, a report from Statistics Canada said the average weekly earnings of non-farm payroll employees increased by 0.6% from December 2019 to $1,051 in January 2020. Year over year, earnings increased 4%.

U.S. stocks ended with sharp losses despite attempting a recovery after a weak start. Profit taking and caution ahead of the weekend amid lingering worries about the economic impact of the coronavirus weighed on stocks.

The Dow plunged 4.1%, the Nasdaq tumbled 3.8% and the S&P 500 declined 3.4%.

The major European markets also ended sharply lower, while markets across the Asia-Pacific region ended mixed.

In commodities, West Texas Intermediate Crude oil futures for May ended down $1.09, or about 4.8%, at $21.51 a barrel, after touching a low of $20.88 in the session.

Gold futures for April ended down $26.20, or about 1.6%, at $1,625.00 an ounce, after dropping to a low of $1,611.40 an ounce.

Silver futures for May ended down $0.142 at $14.534 an ounce, while Copper futures for May closed lower by $0.0600 at $2.1720 per pound.

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