Canada’s main stock market fell to a near seven-year low and the loonie declined by as much as 3.1 per cent on Wednesday as investors priced in a coronavirus-driven global recession into stock and commodity markets even as Ottawa rolled out economic stimulus.

The Toronto Stock Exchange Composite Index closed down 7.6 per cent at 11,721.42, having hit its lowest intraday level since July 2012 at 11,384.06. The index has fallen about 35 per cent from its Feb. 28 peak.

“Today feels like the capitulation everyone was waiting for,” said Greg Taylor, portfolio manager at Purpose Investments. “The headlines will get worse but markets are now pricing in a major global recession.”

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Wall Street resumed a steep slide while bond markets rushed to price in the sheer scale of government support programs and handouts announced over the past 24 hours, all aimed at softening the economic shock of the virus.

Canadian Prime Minister Justin Trudeau said his government would provide C$27 billion in stimulus directly to Canadian families and businesses.

Bank of Canada Governor Stephen Poloz left the door open to further interest rate cuts and to quantitative easing, an emergency stimulus measure that could include the purchase of government bonds. Last Friday, the Bank of Canada slashed its key interest rate by 50 basis points to 0.75 per cent.

“We expect the Bank of Canada to further reduce the target interest rate, taking it down in the coming days or weeks to 0.25 per cent, the low of the last recession,” said Royce Mendes, senior economist at CIBC Capital Markets.

The United States and Canada agreed to close the border between the two countries to non-essential travel.

The sector with the biggest decline on the TSX was energy, down 12.5 per cent, as the price of oil, one of Canada’s major exports, extended its recent slide. U.S. crude oil futures

plunged to a 18-year low, settling with a decline of 24.4 per cent at $20.37 a barrel.

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The Canadian dollar touched its weakest intraday level since January 2016 at 1.4650 per U.S. dollar. It was last at 1.4459, down 1.8 per cent.

Canada’s annual inflation rate dropped to 2.2 per cent in February on moderating gasoline prices, Statistics Canada said, with some analysts saying it was unlikely stay above the central bank’s 2 per cent target.

Canadian government bond yields were higher across a steeper yield curve in sympathy with U.S. Treasuries as investors braced for increased fiscal spending. The 10-year yield was up 8.8 basis points at 1.044 per cent.

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