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12.03.2020 Europe

European stocks plummet as Trump coronavirus travel ban feeds recession fears

By RFI
REUTERS/Andrew Kelly
LISTEN MAR 12, 2020
REUTERS/Andrew Kelly

Stock markets have tumbled in Europe and across the globe and oil prices slumped as US President Donald Trump banned all travel from mainland Europe to America for a month to fight the coronavirus pandemic, ramping up fears of worldwide recession.

The stock markets carnage hit Europe, with losses accelerating in Paris and Frankfurt, which both fell more than 10 percent after the European Central Bank unveiled a series of measures to shore up the eurozone economy, but it did not lower interest rates like central banks elsewhere.

The ECB ramped up its super-cheap bank lending programme, vowing to "support bank lending to those affected most by the spread of the coronavirus, in particular small and medium-sized enterprises", as well as spend an additional 120 billion euros ($135 billion euros) this year buying up government and corporate bonds.

On Wall Street, the stocks resumed their slide lower. The Dow tumbled 7.4 percent in the first minute of trading, having fallen 5.9 percent on Wednesday.

Following an overnight slump, Sydney tumbled 7.4 percent Thursday to suffer its worst session since the 2008 global financial crisis.

Tokyo closed down 4.4 percent, putting it in a bear market after slumping more than 20 percent from a recent high.

Hong Kong shed 3.7 percent, though Shanghai was off 1.5 percent as China continues to see infection rates slow.

Manila crashed nearly 10 percent -- sparking a brief trading halt -- after it emerged Philippines President Rodrigo Duterte would undergo a precautionary test for the virus.

In the Gulf, Saudi dumped 3.0 percent in value, Dubai tumbled 8.0 percent and Qatar shed 4.5 percent.

"Taking the view that the president's travel ban has only further heightened the likelihood of a global recession... investors fled," said Connor Campbell, market analyst at Spreadex trading group.

Massive negative signal
"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 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.

The coronavirus market crash has wiped off $11.3 trillion from global valuations as of the end of Wednesday, according to Howard Silverblatt, a senior analyst at S&P Dow Jones Indices.

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

Oil slide
Elsewhere Thursday, oil prices were hammered, with benchmark Brent North Sea crude losing more than seven percent, as the travel restrictions will further dampen energy demand.

"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 oil market was already under pressure after Saudi Arabia and Gulf partner UAE stepped up a price war on Wednesday by unveiling plans to flood global markets.

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.

(AFP)

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