Stock markets in New York and Toronto jumped significantly higher on Monday on hopes that trillions of dollars in stimulus spending by governments around the world will be enough to offset the economic damage wrought by the coronavirus that causes COVID-19.
The TSX’s main index and the Dow Jones industrial average in New York both rose more than seven per cent within minutes of the start of trading. That’s more than 700 points and more than 1,400 respectively.
“Stocks and commodities around the world have surged upward overnight,” said Colin Cieszynski, chief market strategist at SIA Wealth Management in Toronto.
“A number of signs suggesting that there could be a light at the end of the coronavirus lockdown tunnel for some countries has started to ease investor fear and uncertainty over how long the economic slowdown could last and how deep could it be.”
Among the reasons for optimism is word out of China that Wuhan, the city where the coronavirus outbreak first happened, is scheduled to come out of the lockdown it has been in since the end of January. In all, the city will have been locked down for more than 10 weeks — and a sign for investors that there may be a light at the end of the tunnel that North America has just started to enter into.
Another reason for optimism is that U.S. lawmakers seem to be lumbering toward some sort of deal in Washington that could see the world’s richest economy pour roughly $2 trillion US into offsetting the economic impact of the virus that has shut down large swathes of the economy.
“World markets are in a much better place so far this morning,” Scotiabank economist Derek Holt said. “Let’s hope it sticks.”