Stocks see worst slump in decades as Trump ban bites

Donald Trump moved markets sharply lower

Equity markets plunged Thursday, with some recording their worst day in decades, after the US banned travel from Europe and the ECB failed to stem the selling tide.

The oil price also fell sharply as the move ramped up fears of a worldwide recession.

The European Central Bank failed to calm nervous investors despite unveiling measures to support the economy.

Markets lived through "a horror show", said Connor Campbell, an analyst at Spreadex. The travel ban was heightening "the likelihood of a global recession", he said.

Patrick J. O'Hare at Briefing.com said "all of the efforts being made to curtail the spread of the coronavirus are going to produce negative economic outcomes that will weigh far and wide".

Across the world, stock markets saw daily plunges not seen in decades, if ever.

- Worst since 80s -

London recorded its worst day since the 1987 crash and Frankfurt its blackest day since 1989, the year the Berlin Wall fell.

Paris suffered its worst one-day loss ever.

Tokyo entered bear territory, and Sydney saw its worst session since the 2008 global financial crisis.

The European Central Bank ramped up its super-cheap bank lending programme and other stimulus measures, but its failure to lower interest rates sparked further selling.

"Eschewing the old-fashioned and arguably ineffective approach of headline rate cuts, it has instead gone for more QE (bond-buying) and a direct loan programme for small businesses," said market analyst Chris Beauchamp at online trading firm IG.

Markets were also unnerved by ECB chief Christine Lagarde saying it wasn't her job to close the spread between Italian and German government bonds, which investors took as a sign that she may be underestimating the degree of stress in the eurozone financial system.

Milan stocks fell by 16.9 percent as Italy went into lockdown.

On Wall Street, the Dow tumbled more than eight percent in early trading, triggering a 15-minute suspension in trading at one point, before paring losses when the New York Fed announced a big liquidity injection into the banking system.

- Projections 'out the door' -

"Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell... it just fell in your lap," said AxiCorp's Stephen Innes after Wall Street's sharp opening fall.

Travel and tourism have been particularly hard-hit as countries institute travel bans and quarantine requirements, with airline stocks nosediving.

The recent stock market downturn had 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.

Oil prices were also hammered, with benchmark Brent North Sea crude losing more than eight percent as a slowing economy was expected to dampen demand for petroleum and Saudi was fuelling a price war.

"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."

- Key figures around 1745 GMT -

New York - Dow: DOWN 7.7 percent at 21,696.46 points

London - FTSE 100: DOWN 9.8 percent at 5,299.84 (close)

Frankfurt - DAX 30: DOWN 12.2 percent at 9,161.13 (close)

Paris - CAC 40: DOWN 12.3 percent at 4,044.26 (close)

Milan - FTSE-Mib: DOWN: 16.9 percent at 14,894 (close)

EURO STOXX 50: DOWN 11.6 percent at 2,569.87

Tokyo - Nikkei 225: DOWN 4.4 percent at 18,559.63 (close)

Hong Kong - Hang Seng: DOWN 3.7 percent at 24,309.07 (close)

Shanghai - Composite: DOWN 1.5 percent at 2,923.49 (close)

Brent North Sea crude: DOWN 8.8 percent at $32.64 per barrel

West Texas Intermediate: DOWN 6.6 percent at $30.80 per barrel

Dollar/yen: UP at 105.19 yen from 104.54 yen at 2100 GMT

Euro/dollar: DOWN at $1.1098 from $1.1276

Pound/dollar: DOWN at $1.2539 from $1.2825

Euro/pound: UP at 88.50 pence from 87.91 pence

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Donald Trump moved markets sharply lower