Stocks, crude plunge as Trump travel ban fans recession fears

Hong Kong, March 12

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Global equities and oil prices fell through the floor again on Thursday 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 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%, 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 early trade, London and Paris each plunged 4.5%, while Frankfurt dived 5%. Gulf markets also tumbled, with Riyadh down more than 4%.

The Japanese yen, a key haven in times of crisis, jumped more than 1% against the dollar.

The losses followed another brutal session on Wall Street, where the Dow fell into a bear market and futures pointed Thursday to 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 quarantine requirements, with Italy in a country-wide lockdown.

Oil prices were also hammered, with both main contracts 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 plans to flood global markets.

“We are now staring at the whole world going into a lockdown,” Vandana Hari, of Vanda Insights, said. “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 co-ordinated 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