Home Business Equities, oil slump as Trump’s shock Europe ban fans global recession fears

Equities, oil slump as Trump’s shock Europe ban fans global recession fears

LONDON: Stock markets tumbled across the globe and oil prices slumped today after President Donald Trump banned all travel from mainland Europe to the United States for a month to fight the coronavirus pandemic, ramping up fears of worldwide recession.

With the market panic having already wiped away more than US$ 11 trillion (RM46.53 trillion) in global value, the head of the World Health Organization (WHO) said the COVID-19 outbreak “is a controllable pandemic” if countries stepped up measures to tackle it.

“We are deeply concerned that some countries are not approaching this threat with the level of political commitment needed to control it,” WHO director-general Tedros Adhanom Ghebreyesus told diplomats in Geneva, according to a statement.

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

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

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

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

Wall Street stocks were deep in the red early today, resuming after a 15-minute suspension as the economic pain from the coronavirus deepens and widens.

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About 25 minutes into trading, the Dow Jones Industrial Average was down more than 2,000 points or 8.7%. The broad-based S&P 500 tumbled 8.1%, while the tech-rich Nasdaq Composite Index shed 7.9%.

Trading was suspended after losses hit 7% on the S&P 500, a benchmark that triggers circuit breakers halting transactions to manage crises.

In Europe, the Paris and Frankfurt stock exchanges fell more than 10% in afternoon trading after the European Central Bank unveiled a series of measures to shore up the eurozone economy but did not cut rates.

The CAC 40 was down 10.2% around 1340 GMT, while the DAX 30 in Frankfurt had tumbled 10.3%.

Stock markets in energy-rich Gulf states also tumbled today with Saudi shares down 3.0% following worldwide losses amid fears over the coronavirus pandemic and an oil price war.

Dubai Financial Market dived more than 8.0% at close on the last trading day of the Muslim week. Abu Dhabi shares dropped 7.4%.

Stocks in gas-rich Qatar dropped 4.5%, while bourses in Bahrain and Oman were down 3.6% and 2.6%, respectively.

The stock market in Kuwait was closed as authorities announced a shutdown of government offices for two weeks and cancelled international flights in a bid to prevent the spread of the coronavirus.

All seven bourses ended the week with heavy losses, led by Dubai which was down 17.4%.

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“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.

“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 US$ 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.

Elsewhere today, oil prices were hammered. Brent crude was down US$ 2.33, or 6.5%, at US$ 33.46 a barrel by 1359 GMT. US crude was down US$ 1.79, or 5.4%, at US$ 31.19.

“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.

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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, Reuters

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