TOKYO -- Asian stock markets swooned Thursday after U.S. President Donald Trump announced a ban on travel from Europe. Trump announced the decision after the World Health Organization declared the new coronavirus a pandemic.
The travel suspension, which runs for 30 days starting Friday, excludes the U.K. and returning U.S. citizens who have undergone "appropriate screenings."
Foreign nationals who have been in Europe over the 14 days prior to arrival will not be allowed to enter the U.S. The strict rules come as the continent faces a deepening crisis. Italy, which had confirmed more than 10,000 infections as of Wednesday, has been hit especially hard.
The ban is aimed at allowing the U.S. administration to get a handle on the widening outbreak, but it did little to ease investors' frayed nerves. Trump's address sent Asian investors into a frenzy, with major stock indexes diving across the region.
Japan's Nikkei Stock Average plummeted more than 1,000 points, or nearly 6%, at one point to 18,339, its lowest level since April 2017. The sharp decline -- more than 23% from its recent high in January -- pushed the benchmark index into bear market territory, which accelerated the sell-off. The index closed at 18,559, down 4.4% from the previous day.
Other markets also slumped. Australia's benchmark index dropped 7%. Hong Kong fell sharply, down nearly 4%, while the Shanghai Composite Index slipped 1.7%. In Thailand a circuit breaker to halt trading temporarily was triggered for the first time in 11 years as the benchmark SET index fell by 10%. Circuit breakers were also triggered in Indonesia and the Philippines as stock prices declined sharply.
India's 30 component S&P BSE Sensex slumped 6.9% in Mumbai as India closed its borders till April 15 to halt the spread of the virus. The broader NSE Nifty 50 Index dropped 7%.
India, Sydney and Singapore have all declined more than 20% from their recent high, putting them in a bear market. Hong Kong is just shy of that mark, while the S&P 500 also in bear market territory.
Before Trump's address, the Dow Jones Industrial Average closed down 5.86%, shedding 1,464.94 points to 23,553.22 on Wednesday as market players reacted to the WHO declaration and concerns about the lack of a clear stimulus plan from Washington.
Takahide Kiuchi, executive economist at the Nomura Research Institute and a former member of the Bank of Japan's policy board, pointed out that the measures announced by Trump played a big part in the market crash because they "did not meet the market's high expectations for a more detailed and large-scale plan, which led to a huge disappointment."
"Investors just don't know how to price the risk today. Fundamentals have broken down and they just don't know what it will do next," said Hao Hong, head of research at BOCOM International in Hong Kong. "The virus has done what the trade war couldn't do: [cause] global economic disintegration. And [the] broad based policies being announced by monetary and fiscal authorities is not the medicine. Even in the U.S., Trump's policies were [seen as] light, and there is a question over whether [they] will get through the Congress."
In his speech, Trump also said the U.S. would halt imports of European goods for 30 days, but later corrected himself and said this would not happen. He also announced measures meant to soften the impact on businesses.
"I am instructing the Small Business Administration to exercise available authority to provide capital and liquidity to firms affected by the coronavirus," Trump said. The agency will provide loans to affected states and Trump said he will ask Congress "to increase funding for this program by an additional $50 billion."
For infected citizens, Trump said he has obtained an agreement from health insurers to waive payments for coronavirus treatment and to extend insurance coverage.
The ban on arrivals from Europe follows U.S. restrictions on foreign nationals who had been in China within 14 days that was imposed in February. The Trump administration is also cautioning against travel to certain parts of South Korea. Trump said his administration is "monitoring the situation" in the two Asian countries.
"I will never hesitate to take any necessary steps," he said.
In addition to the implosion in equity markets, the yield on 10-year Treasuries slid about 6 basis points to 0.81% while that on the 30-year bond dropped 12 basis points to 1.3%. The yen rose 1.3% to 103.26 versus the dollar. Oil prices weakened, with the benchmark U.S. West Texas Intermediate crude falling 4.3% to $31.54 a barrel.
"Markets are moving closer to peak panic. With the global outbreak now a reality, the markets are grappling with what the shutdown looks like," said Dermot Ryan, Australian equities portfolio manager at AMP Capital. "Markets up to this point have been behind the curve. This [virus outbreak] may play out longer than they expected. This is a supply and demand shock, which is why the market is in such flux."
The European Central Bank's policy board meets Thursday, with markets expecting new stimulus measures, including ultra-cheap loans for banks to pass on to small and medium-size businesses. Traders have priced in a 10 basis point cut to its already record-low -0.50% policy rate.
Additional reporting by Jada Nagumo in Tokyo and Narayanan Somasundaram in Hong Kong.