By Joanne Chiu
(The Wall Street Journal) – US stock futures and global indexes plunged, adding new turmoil to a roller-coaster week for markets, as a US travel ban stoked renewed worries about the coronavirus’s economic toll.
S&P 500 futures were down 4%, suggesting US shares could be set for another punishing session later Thursday, a day after the Dow Jones Industrial Average slid into a bear market.
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European indexes fell at the start of trading Thursday, with the pan-continental Stoxx Europe 600 shedding 5.4% and Italy’s FTSE MIB falling 5.8%.
Benchmarks in Australia, Hong Kong, India, Japan and South Korea fell to multiyear lows, crude-oil prices dropped and US government bonds rallied.
On Wednesday night, President Trump issued a 30-day ban on most travel from Europe to the US, a new serious disruption to everyday activity. Mr. Trump said he would offer financial assistance to those affected by the coronavirus and that the pandemic isn’t a financial crisis.
Trump’s coronavirus travel ban announcement was made apparently without consultation with the travel industry or US allies and seems set to cause massive disruption | Analysis by @stcollinson https://t.co/h4YykHyaQL
— CNN (@CNN) March 12, 2020
Daryl Liew, head of portfolio management at REYL Singapore, said markets were reacting negatively to “drastic containment strategies,” such as those introduced by the US and Italy, which are likely to hurt economic activity and business operations.
Italy has ordered all restaurants and bars, and most stores, to close as it races to contain the worst coronavirus outbreak outside China.
Investors were disappointed Mr. Trump didn’t clearly articulate details of how he planned to roll out an economic stimulus package, said Takeo Kamai, head of execution services at CLSA Securities Japan Co. in Tokyo.
US 10-year Treasury yields fell to 0.747%, according to Tradeweb. Bond yields fall when prices rise. Brent crude, the global oil benchmark, fell nearly 5% to $34.01 a barrel.
In Tokyo, Japan’s Nikkei 225 plunged 4.4%, joining the Dow and numerous international counterparts in a bear market – a measurement defined as a retreat of more than 20% from a recent peak.
Australia’s benchmark S&P/ASX 200, whose performance is heavily influenced by financial and natural-resources stocks, fell 7.4% to its lowest in more than three years.
Banks were notable losers across the region. For lenders, tough economic times can mean less new business, more bad loans, and thinner margins on lending because both short- and long-term interest rates are low. Japan’s Mitsubishi UFJ Financial Group fell 5.3%, while Commonwealth Bank of Australia dropped 7.9%.
The outlook for the world economy is dimming rapidly due to the pandemic. This week IHS Markit slashed its forecast for global growth this year by 0.8 percentage point to 1.7%, saying it expects zero growth in the eurozone, a contraction in Japan and expansion of just 4.3% in China this year.
On Monday, U.S. stocks suffered their biggest drop since the 2008 global financial crisis. They rebounded a day later, and then sold off again steeply on Wednesday, with declines intensifying after the World Health Organisation declared the coronavirus crisis a pandemic.
Paul Sandhu, the Asia-Pacific head of multi-asset quant solutions and client advisory for BNP Paribas Asset Management in Hong Kong, said markets would remain volatile. “The fear coming off from the coronavirus is going to be something that continues over the next few weeks at least,” he said.
By mid-afternoon Thursday in Hong Kong, the Hang Seng Index dropped more than 3%. Stocks in mainland China, which have proved resilient recently, dropped modestly, with the Shanghai Composite retreating 1.7%.
Elsewhere in the region, Thailand’s SET Index plummeted more than 8% to the lowest since 2012. “Thailand’s economy is vulnerable to the pandemic because it is heavily reliant on tourism,” said Joanne Goh, investment strategist at DBS Bank in Singapore.
— Suryatapa Bhattacharya contributed to this article.
Write to Joanne Chiu at [email protected]
