The North American stock markets were shut down shortly after opening Monday morning when circuit breakers designed to slow the sale of panic went off within minutes of opening.
The NYSE, Nasdaq and TSX all hit what is known as a Level 1 trading halt within minutes of opening Monday morning. Such a stop automatically suspends all trading on the market for 15 minutes after a drop of more than seven percent.
A level 2 stop is automatically imposed after a drop of 13%, for an additional 15 minutes. If the decline reaches 20%, a level 3 stop occurs to stop trading for the rest of the day.
The TSX lost more than 1,400 points, or 8%, in the minutes after it opened, so the Canadian index breaker was triggered. This is the worst day for the TSX since the financial crisis.
Trading stops were lifted 15 minutes after implementation and the sale continued in the United States and Canada – but not enough to implement a level 2 stop, so far.
The panic started on Sunday evening after Saudi Arabia launched a total price war on the oil market, announcing that it would remove any production cap. The move lowered the price of crude oil by more than 25 percent and added to existing concerns about the coronavirus that is currently spreading around the world.
Bond yields in the United States and Canada fell to their lowest levels ever, as investors rushed toward perceived security of public debt.