Futures point to another sharp sell-off
Wall Street is once again set to see a sharp sell-off on Thursday after President Donald Trump announced a 30-day travel ban from Europe to the United States to reduce the spread of coronavirus, igniting fresh concerns about the disruption to businesses.
The restrictions will affect all foreign nationals (with the exception of US and UK citizens) coming from the “Schengen area,” a region in Europe where travelers can cross borders without passports. “We made a lifesaving move with early action on China. Now we must take the same action with Europe,” Trump said at the White House on Wednesday.
Although the president unveiled measures including asking Congress to pass undefined payroll-tax cuts and promising emergency action to provide financial assistance for working Americans who are quarantined or ill, his speech appeared to give little assurance to market players that the administration is tightening its grip on the fast-spreading virus.
As of 4:35 a.m. ET, futures tied to the Dow Jones Industrial Average were seen plunging 1,233 points, or 5.23% to 22,342. The S&P 500 futures declined 137.25 points, or 5.01% to 2,603 while the tech-heavy Nasdaq 100 futures dropped 401 points, or 5.01% to 7,602.5.
World Health Organization declares the coronavirus outbreak a pandemic
Meanwhile, the World Health Organization (WHO) public on Wednesday declared the deadly novel coronavirus outbreak a pandemic. The WHO defines a pandemic as “an epidemic occurring worldwide, or over a very wide area, crossing international boundaries and usually affecting a large number of people.”
Tedros Adhanom Ghebreyesus, the director-general of WHO said the situation will get worse. “We are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction. We have therefore made the assessment that COVID-19 can be characterized as a pandemic,” Tedros said.
“We expect to see the number of cases, the number of deaths, and the number of affected countries climb even higher,” the director added. The virus has infected over 126,000 worldwide, according to data compiled by WHO.
ECB decision in focus
In other news, market players are widely expecting the European Central Bank (ECB) to trim the rate it charges banks to store money in its virtual vaults and announce other stimulus measures at 8:45 a.m. ET.
Earlier this week, ECB boss Christine Lagarde warned that Europe would “see a scenario that would remind many of us of the 2008 Great Financial Crisis,” unless leaders took coordinated action to contain the coronavirus pandemic.
At the end of its governing council meeting, the ECB is likely to make a small reduction of 10 basis points since the key rate is already at a record-low minus 0.5%.
The bank may also announce that it is buying more corporate and government bonds as a way of raising demand, pushing market interest rates lower, and making it cheaper for companies and governments to borrow money.
