On Friday, the markets finally took notice of the coronavirus. The S&P 500 was down 1.8% and Toronto was down 1.0%.
It may be be that the coronavirus will never become a truly serious health threat. But it could nevertheless pead to an economic slowdown.
On Friday some of the bigger decliners included:
Apple – down 4.4%. BHP down 3.3% (a very large proportion of their sales are to China)
Linamar – down 2.8%. (They have some manufacturing in China and also are always affected by slow downs in trade and movements across borders).
Visa was down 4.4% due a weaker outlook (no related to the virus, but no-doubt exacerbated by the overall market decline)
Amazon was up 7.4% after a very strong earnings release.
I mentioned a few days ago that Boston Pizza had extended its credit lines on favorable terms and now has the ability to buy back some shares if it chooses to. (But they may need to seek permission from the TSX first.) It remains very possible that they will have to trim the distribution and so caution is warranted. I’m really not sure it was wise but I added a bit to my position on Friday. If the distribution does have to be trimmed then the units would almost certainly drop in price, possibly over-reacting to the downside. It’s mostly going to depend on whether or not they can show some same-store sales growth.
If markets do drop, it will certainly be beneficial to have some cash to take advantage of lower prices.