- The S&P/TSX Composite Index opened up more than 6 per cent this morning as hopes increased for further stimulus measures
- The US Federal Reserve announced on Monday that it would offer unlimited bond buying in an attempt to avoid a global depression
- It was also revealed that the US was nearing a deal on a $2 trillion economic rescue package
- The Canadian dollar has also strengthened against the US currency today
- As of 2:00pm EST, the S&P/TSX Composite Index was up 8.93 per cent, or 1,002.63 points, to 12,230.85
The S&P/TSX Composite Index has seen a positive turnaround today, opening up more than 6 per cent this morning.
It would seem that investors have found solace in the hope of increasingly radical stimulus plans, after new measures were announced by the US Federal Reserve on Monday.
The crux of the plan is to shore up businesses, both large and small, in an effort to keep markets functioning. Central to this is the Federal Reserve’s pledge to buy back as much government-backed debt as needed to solidify the markets for housing and Treasury bonds.
In addition, and for the first time in history, it also announced that it would purchase corporate bonds.
The sweeping programs were rounded out with a promise to unveil further plans, including support for small businesses, in due course.
Simultaneously, a proposal by the US House of Representatives to grant airlines and contractors a $40 billion bailout lifted the S&P 1500 airlines index by 15.7 per cent. It was also reported that the total US economic rescue package is approaching $2 trillion.
All of these new measures fall under a “whatever it takes” umbrella as the US Government seeks to curb the economic fallout brought on by COVID-19.
As a result, the benchmark S&P 500 index jumped more than five per cent this morning, having lost over $9 trillion in value from its record high in mid-February.
Such a drastic battle plan has had a profound impact, with the benefits spilling over the northern border and into Canada.
The Canadian dollar made a marginal comeback, up 0.1 per cent to 1.4482 against its US counterpart, after a four-year low on Thursday last week.
A handful of Canadian legislators gathered today to green-light a proposal which would dump emergency funds worth billions into the emptying pockets of struggling individuals and businesses.
The TMX Group, which operates the TSX and TSX-V, also joined the fight, announcing more relaxed rules for listed companies in dire straits.
More time will be offered to hold annual shareholder meetings, and regulations regarding the filing of financial statements have also been eased.
However, any sustained optimism has been quickly curtailed by the prevailing uncertainty of COVID-19’s full impact.
With no indication that cases worldwide have peaked, global markets are still very much in hot water.
As of 2:00pm EST, the S&P/TSX Composite Index was up 8.93 per cent, or 1,002.63 points, to 12,230.85.