Shares fall on travel ban

New Zealand shares slid 5 per cent yesterday afternoon after President Donald Trump said the United States will suspend all travel from Europe for 30 days amid the coronavirus outbreak.

The NZX top-50 began yesterday down 1.7 per cent, after the World Health Organisation officially declared the Covid-19 outbreak a pandemic.

At 5pm, the index was down 4.53 per cent, or 593.09 points, at 10,380 – recovering from a slide of more than 5 per cent earlier in the afternoon. In Australia, the benchmark ASX200 Index was down 7.27 per cent, with bank stocks among the biggest decliners.

In the US, the Dow Jones index closed down 5.9 per cent, the S&P500

index was down 4.9 per cent and the tech-rich Nasdaq index ended down 4.7 per cent. The Dow Jones index is now 20 per cent off its peak, ending an 11-year ‘‘bull run’’, the longest-running bull market for US stocks in history.

Trump blamed the European Union for not acting quickly enough to address the ‘‘foreign virus’’ and said US clusters were ‘‘seeded’’ by European travellers.

‘‘We made a lifesaving move with early action on China,’’ Trump said. ‘‘Now we must take the same action with Europe.’’

The restrictions won’t apply to the United Kingdom.

Matt Henry of Forsyth Barr said it had been an extreme few weeks on global markets, with the fastest bear market – or 20 per cent decline – in history based on the US S&P500 overnight.

‘‘Obviously the announcement [yesterday] by Trump of the travel ban in Europe is only going to extend the fears that it’s going to be a significant economic downturn,’’ Henry said.

‘‘It’s a very difficult position for markets at the moment, the coronavirus is unprecedented.

‘‘This was a month or so ago largely a China issue, now it’s spread to be a major issue in Italy and Iran and it’s in its early stages in a lot of other countries, so it’s very difficult to know how the virus is contained or spread from here – so that does lead to a considerable amount of uncertainty, which markets don’t like.’’

ANZ added its voice earlier yesterday to predictions that New Zealand faces a recession as a result of the coronavirus.

‘‘There is considerable uncertainty about the impacts the inevitable global slowdown will have on the domestic economy, but risks are rising. The global extent of the Covid-19 outbreak is worryingly worsening, with global growth clearly in jeopardy,’’ said ANZ senior economist Liz Kendall.

Nigel Green, chief executive of financial advisory firm deVere Group, believes a global recession is now almost inevitable. ‘‘We can see both supply and consumer demand are already being impacted in key sectors, such as travel and tourism, hospitality, manufacturing and retail, and it is going to extend to others.’’ additional reporting by AP

‘‘It’s a very difficult position for markets at the moment, the coronavirus is unprecedented.’’ Forsyth Barr’s Matt Henry