World Markets Shudder

HONG KONG (AFP) — Global equities and oil prices fell through the floor again Thursday after President Trump banned travel from mainland Europe to the United States 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 labeled the outbreak a pandemic and criticized "alarming levels of inaction" about 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 by 3.7%, and Shanghai was off just 1.5% as China continues to see infection rates slow.

Seoul, Singapore and Jakarta lost more than 3%, Mumbai tanked by more than 6% and Wellington, New Zealand slid 5% while Taipei retreated by 4.3%.

Manila crashed 10%, sparking a brief trading halt, after it was reported that Philippines President Rodrigo Duterte would undergo a precautionary test for the virus, and 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 triggered an automatic halt by falling 10%.

In early trade London and Paris each plunged by 4.5%, while Frankfurt dived 5%. Gulf markets also tumbled, with Riyadh down more than 4.0%.

The Japanese 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 U.S. markets, it just fell in your lap," said foreign-exchange trader AxiCorp's Stephen Innes.

The losses followed another brutal session on Wall Street, where the Dow fell into a bear market and futures on Thursday indicated another rout.

The coronavirus outbreak has left virtually no sector untouched, though travel and tourism have been particularly hard-hit as countries institute travel bans and quarantines, with Italy in a countrywide lockdown.

The number of cases across the globe has risen to more than 126,000 with 4,600 deaths, according to Johns Hopkins University.

In announcing the European travel ban — which excludes Britain — Trump said the continent has 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, his aides corrected him later, saying that "the people transporting goods will not be admitted into the country, but the goods will be."

Oil prices were also hammered, falling around 6% at one point before edging back slightly. The oil market was already under pressure after Saudi Arabia and Gulf partner UAE stepped up a price war with Russia, to flood global markets.

"We are now staring at the whole world going into a lockdown," said Vandana Hari, of Vanda Insights, a research firm. "Oil demand can be expected to crash through the floor and all previous projections on oil consumption are now out the door."

The Saudi move was the latest escalation of a fight among oil producers after Russia balked at an OPEC-backed plan to cut production in response to lost demand because of the coronavirus.

"Markets are crying out for a coordinated response to COVID-19 headwinds and a lack of concrete U.S. policy action is rattling markets," said Tapas Strickland, senior analyst at National Australia Bank.

Trump's address included several measures intended to ease the financial burden particularly for small business, including payroll tax relief and deferred tax payments.

But he did not unveil any large-scale tax cuts, which foreign-exchange trader OANDA's Jefrey Halley said "has probably disappointed markets more than anything."

The bloodbath across global trading floors has come despite a raft of measures by governments worth at least $150 billion to offset the impact of the outbreak, while central banks will be called upon to cut already low interest rates and introduce other fiscal measures.

German Chancellor Angela Merkel has said she will do "whatever is necessary" to help the economy, while the European Central Bank is to hold a policy meeting later in the day at which it is under pressure to open up the taps.

© Agence France-Presse

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