Trump’s shock ban sends equities, oil into tailspin
HONG KONG: Global equities and oil prices fell through the floor again yesterday after Donald Trump banned all travel from mainland Europe to the US for a month to fight the coronavirus, ramping up fears the global economy will careen into recession.
The news came after the World Health Organization (WHO) officially labelled the outbreak a pandemic and hit out at “alarming levels of inaction” for its spread.
Asian equity markets, already deep in the red in reaction to the WHO announcement, cratered after Trump’s address.
Tokyo ended down 4.4%, putting it in a bear market after falling more than 20% from a recent high, while Sydney lost 7.4% in the ASX 200’s worst day since the 2008 financial crisis.
Hong Kong fell 3.7%, though Shanghai was off 1.5% as China continues to see infection rates slow.
Seoul, Singapore and Jakarta lost more than 3% each, Mumbai tanked more than 6% and Wellington slid 5% while Taipei retreated 4.3%.
Manila crashed 10% – sparking a brief trading halt – after it emerged Philippines President Rodrigo Duterte would undergo a precautionary test for the virus, while his finance minister and head of the central bank were among several officials who were to go into quarantine. It ended down 9.7%.
Bangkok also triggered an automatic halt by falling 10%.
In Europe, shortly after the open, London's benchmark FTSE 100 index was down 5.3%, Frankfurt's DAX 30 plunged 5.8% and the Paris CAC 40 tumbled 5.7%.
The carnage was felt right across the continent, with stock market indices in Italy, Spain and Switzerland also shedding around 5.0%.
Stock markets in Gulf states also tumbled with Saudi shares down over 4.0%. Dubai dived more than 7.0% at the open. Abu Dhabi shares dropped 6.0%. Stocks in gas-rich Qatar fell 5.2%, while bourses in Bahrain and Oman were down 3.5% and 2.2%, respectively.
Japan’s yen, a key haven in times of crisis, jumped more than 1%against the dollar.
“Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell ... after a massively negative signal from trading in US markets it just fell in your lap,” said AxiCorp’s Stephen Innes.
The losses followed another brutal session on Wall Street, where the Dow fell into a bear market.
The coronavirus outbreak has left virtually no sector untouched, though travel and tourism have been particularly hard-hit as countries institute travel bans and quarantine requirements.
In announcing the Europe ban – which excludes Britain – Trump said the continent had seen a surge in new cases because governments failed to stop travel from China, where the Covid-19 epidemic began.
He said the prohibitions would also
“apply to the tremendous amount of trade and cargo”, and “various other things as we get approval”.
However, the White House afterwards clarified that “the people transporting goods will not be admitted into the country, but the goods will be”.
Oil prices were also hammered. The oil market was already under pressure after Saudi Arabia and the United Arab Emirates stepped up a price war with plans to flood global markets.
Brent crude was down US$2.46, or 6.9%, at US$33.33 by around 1108 GMT. US crude was down US$2.05, or 6.2%, at US$30.93.
“Markets are crying out for a coordinated response to Covid-19 headwinds and a lack of concrete US policy action is rattling markets,” said Tapas Strickland, senior analyst at National Australia Bank. – AFP, Reuters