Equities and oil prices yesterday fell again after US President Donald Trump banned all travel from Europe to the US for a month to fight COVID-19, ramping up fears that the global economy would careen into recession.
The news came after the WHO officially labeled 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, fell further after Trump’s address.
Tokyo ended down 4.4 percent, while Sydney lost 7.4 percent in the ASX 200’s worst day since the 2008 financial crisis. Hong Kong fell 3.7 percent while Shanghai was off 1.5 percent.
Seoul, Singapore and Jakarta each lost more than 3 percent, while Mumbai tanked more than 6 percent and Bangkok more than 8 percent.
Manila fell almost 10 percent after it emerged that Philippine President Rodrigo Duterte would undergo a precautionary test for the virus, while he, his finance minister and head of the central bank were among several officials who were to go into quarantine. Wellington lost 5 percent and Taipei retreated 4.3 percent.
The Japanese yen, a key haven in times of crisis, jumped more than 1 percent against the US 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 US markets, it just fell in your lap,” AxiCorp Financial Services Pty chief market strategist Stephen Innes said.
The losses followed another brutal session on Wall Street, with wave after wave of bad news, including Hilton Worldwide Holdings Inc withdrawing its earnings forecast, and Boeing Co saying it would suspend most hiring and overtime pay.
The Dow Jones fell into a bear market having lost more than 20 percent since its recent high, and futures pointed to another rout in New York and Europe.
The COVID-19 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 countrywide lockdown.
Oil prices were also affected, with both main contracts falling about 6 percent at one point before edging back slightly. The oil market was already under pressure after Saudi Arabia and Gulf partner United Arab Emirates stepped up a price dispute with plans to flood global markets.
“We are now staring at the whole world going into a lockdown,” Vanda Insights Pte Ltd founder Vandana Hari said. “Oil demand can be expected to crash through the floor and all previous projections on oil consumption are now out the door.”
The drops across global trading floors have come despite a raft of measures by governments worth at least US$150 billion to offset the effects of the outbreak, while central banks would be called upon to cut already low interest rates and introduce other fiscal measures.
German Chancellor Angela Merkel has said she would do “whatever is necessary” to help the economy, while the European Central Bank was to hold a policy meeting yesterday at which it was under pressure to open up the taps.
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