Global financial markets at unease as President Trump announces a travel ban on Europe

The White House announced a dramatic measure to contain the spread of Coronavirus in the United States putting a travel restriction on Europe. From Friday, the U.S will be canceling all flights from Europe that further threatens significant disruptions to the global business and economy at large.

The benchmark S&P 500 index extended its downward rally further on Thursday posting a 4.9% decline. A similar drop was also noted on Wednesday. Trading over 20% down from a recent high, the U.S SPX index is now giving a strong bear signal in the short-term.

Investors Resorting To Safe-Haven Assets Like Gold And Yen

Losing 8.3% on Thursday, Euro Stoxx 50 marked a new low since 2016’s second half. The European index had previously recorded a 6.9% decline following which investors had opted for safe-haven assets like gold and yen.

The impact of Trump’s decision was evident on the Asian indices as well. The MSCI’s index that covers the broadest list of Asia-Pacific shares excluding Japan, was last seen 3.2% down on Thursday that marked its lowest level since the first quarter of 2019. Japan’s Nikkei, on the other hand, tanked 5.3% earlier today.

President Trump reiterated in his statement on Wednesday that travel from the United Kingdom to the U.S will remain operational. None of the other European countries, however, will be able to practice a similar privilege for a month. Trump also accentuated that the restrictions have been planned in a fashion to not cast a negative impact on trade.

In his address, the U.S president also directed the Treasury Department to strategize for tax deferrals for virtually all entities that have been hit hard by the health emergency.

U.S Federal Reserve To Hold The Next Policy Meeting On March 17-18

Despite the emergency rate cut by the U.S Federal Reserve last week, investors of the currency market expressed their concerns regarding a deeper economic impact of the Coronavirus and saw a dire need of a more aggressive stance from the Fed Chairman Jerome Powell.

Fed’s next policy meeting is scheduled on March 17-18 with the market now expecting a broader reduction of 1.0% point in the interest rates rather than the previously estimated 0.75% point.

Lastly, the U.S imposed travel restriction on Europe also stirred an around 5% decline in the benchmark FTSE 100 index. The rise in the U.S dollar index pushed the Sterling down to 1.2760 level on Thursday against the greenback.