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Global stocks plunge into bear market as Trump stuns with Europe travel ban

  • Global stocks plunge into bear market as Trump stuns with Europe travel ban
    Shares have tumbled after US President Donald Trump restricted travel to the US from mainland Europe in a bid to slow the spread of the coronavirus. Global stocks plunge into bear market as Trump stuns with Europe travel ban
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Shares have tumbled after US President Donald Trump restricted travel to the US from mainland Europe in a bid to slow the spread of the coronavirus.

Global stocks plunged into a bear market and oil slumped on Thursday after U.S. President Donald Trump banned travel from Europe to stem the coronavirus, threatening more disruption to the world economy.

With the pandemic wreaking havoc on the daily life of millions, investors were also disappointed by the lack of broad measures in Trump’s plan to fight the pathogen, prompting traders to bet on further aggressive easing by the Federal Reserve.

“He (Trump) did not announce any new concrete measures such as a large-scale payroll tax cut to buffer the economy against the impending coronavirus slowdown,” said Jeffrey Halley, senior market analyst at OANDA.

“That has probably disappointed markets more than anything.”

European shares plummeted to their lowest in almost four years, with the benchmark STOXX 600 index falling 4.9% in early deals. Travel and leisure stocks shed 8.6%, hitting their lowest in more than 6 years. .SXTP

The falls pushed the MSCI All-Country World Index, which tracks stocks across 49 countries, into bear market territory, down 20% from its 52-week peak.

The index was down nearly 2% on the day.

Investors also rushed to safe-haven assets from bonds to gold to the yen and the Swiss franc.

U.S. S&P 500 futures ESc1 plummeted as much as 4.9% in Asia and last traded down 4.07 , a day after the S&P 500 .SPX lost 4.89%, leaving the index on the brink of entering bear market territory, defined as a 20% fall from a recent top.

Those fears left a trail of red across many markets.

Japan's Nikkei .N225 crumbled 4.4% to a trough last seen almost three years ago while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 4.7%.

Australian shares plunged 7.4% to the lowest level in more than three years while Seoul's Kospi .KS11 fell 4.8% to 4-1/2-year lows with massive selling prompting a brief trade halt. Thai shares .SETI sank 8.8% to 8-year lows.

Trump announced on Wednesday the United States will suspend all travel from Europe, except from Britain, to the United States for 30 days starting on Friday. However, Trump said trade will not be affected by the restrictions.

He also announced some other steps, including instructing the Treasury Department to defer tax payments for entities hit by the virus.

“The travel ban from Europe has definitely taken everyone by surprise,” said Khoon Goh, head of Asia Research at ANZ in Singapore.

“Already we know the economic impact is significant, and with this additional measure on top it’s just going to multiply the impact across businesses. This is something that markets had not factored in ... it’s a huge near-term economic cost.”

In the money market, traders further raised expectations of another U.S. rate cut, even after the Fed’s emergency cut last week.

Fed fund rate futures are now pricing in a large possibility of a 1.0 percentage point cut, rather than 0.75, at a policy review on March 17-18.