TORONTO -- Canada's main stock index had its worst day in more than three decades, closing down 10.3 per cent Monday as a collapse in oil prices triggered a plunge in the energy sector and the loonie.

The S&P/TSX composite index lost 1,660.78 points to close at 14,514.24 in the largest single-day decrease since 1987.

The TSX hit a 14-month low as the capped energy index decreased more than 27 per cent with Cenovus Energy Inc. slumping 51.6 per cent and Crescent Point Energy Corp. off 43.3 per cent.

The decreases came as crude oil prices sank to a four-year low in the steepest one-day decrease since the 1991 Gulf War. The action was ignited after Russia refused over the weekend to roll back production and Saudi Arabia responded by launching a crude price war by vowing to ramp up output.

The April crude contract was down US$10.15 at US$31.13 per barrel and the April natural gas contract was up seven cents at US$1.78 per mmBTU.

Early panic selling triggered volume alerts that briefly shut markets in the U.S. and Canada.

It prompted a broad-based selloff will all 11 major sectors on the TSX down considerably.

In addition, concerns persist about the economic impact of the spread of the novel coronavirus and geopolitical tensions after North Korea fired some missiles.

"It's kind of the perfect storm of bad events on the weekend and obviously that's culminating in a rush to the exits here this morning on a number of assets," said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.

Panic set in as COVID-19 is starting to hit closer to home with cases spreading in North America, added Allan Small, senior investment adviser at HollisWealth.

"It's leaving people concerned and I think that is translating into the market."

He believes there will be pressure on Saudi Arabia and Russia to reach an agreement, especially since Saudi Arabia had been pushing an output cut that was rejected by Russia.

In New York, the Dow Jones industrial average was down 2,013.76 points or 7.8 per cent at 23,851.02. The S&P 500 index was down 225.81 points at 2,746.56, while the Nasdaq composite was down 624.94 points at 7,950.68.

The Canadian dollar sank to its lowest level since January 2019 by trading at an average of 73.54 cents US compared with an average of 74.51 cents US on Friday.

The April gold contract was up US$3.30 at US$1,675.70 an ounce and the May copper contract was down five cents at US$2.51 a pound.

Archibald expects the next positive development will likely come from global central banks as they provide more liquidity to the markets.

U.S. President Donald Trump will also likely move aggressively with fiscal stimulus such as tax cuts and tariff delays to weaken the market falloff ahead of this fall's presidential election.

"We're an administrative announcement away from the market perhaps moving significantly to the upside," added Small, noting that Trump views the stock market as a score card on his presidency.

"If there's some positive on the virus, some positive to do with oil or something from the administration I think you'll see markets bounce."

While those efforts may help longer term, a global slowdown is widely expected.

"There's no question there's a slowdown here and whether that results in a global recession or not, I'm not sure it matters that much," said Archibald.

Lower crude prices will hurt Canada's oil patch and have real economic implications and job losses, said Michael White, portfolio manager of multi-asset strategies at Picton Mahoney Asset Management.

"We'll probably see layoffs and it could take upwards of six to 12 months to sort itself out in terms of getting back to normal," he said in an interview.

The plunge in oil prices could be disastrous for Alberta that was already facing great consumer and financial stress.

"Foreclosures are growing in Alberta. That's not making headline news necessarily but the financial stress in that province is unfortunately bad and getting worse."

The oil collapse also hammered the heavyweight banking sector, which fell 10.5 per cent. Particularly hit hard were stocks with big exposure to oil and gas, including the Bank of Montreal, whose shares fell more than 13 per cent, along with Scotiabank and National Bank.

In addition, banks are feeling pressure as the 10-year U.S. treasury yields briefly dipped to another record low of 0.318 per cent overnight, said Archibald.

"It's going to be harder for those guys to have positive earnings in this environment and I think that's part of the reason why you're seeing the pressure on the space as well."

This report by The Canadian Press was first published March 9, 2020.