By Geoffrey Smith — Top 5 Things to Know President Donald Trump’s announcement of a European travel ban sends markets into a fresh tailspin, while Italy shuts down all but essential business activity to contain the coronavirus. The European Central Bank is expected to expend more of its depleted pile of ammunition supporting the eurozone economy and banking system, and oil prices take another tumble after Saudi Arabia snubs a meeting where some had hoped for an early rapprochement with Russia. Here’s what you need to know in financial markets on Thursday, March 12th.
Top 5 Things to Know
1. Trump announces Europe travel ban and stimulus measures but nothing on U.S. testing policy
President Donald Trump imposed a 30-day ban on arrivals of people from most of Europe in an effort to stop the spread of what he called a “foreign virus” through the U.S. For reasons he didn’t explain, the measures exempt the U.K. and Ireland, both of which are already reporting sharp increases in confirmed cases.
In a 10-minute address from the White House on the day that the World Health Organization declared the coronavirus outbreak a global pandemic, Trump also confirmed that the administration will defer this year’s April 15 tax deadline, effectively providing a grace period on $200 billion owed to the government by U.S. households and businesses. He also said he’d authorize $50 billion in loans to small- and medium-sized enterprises to ease their cash flow issues.
However, he announced no new measures to improve the speed and breadth of testing across the U.S. His claim that insurance companies would waive all copayment requirement for treatments was also subsequently denied by the industry association, which said the waiver only applied to testing.
2. Europe intensifies lockdown
Italy intensified its lockdown on public life, closing all non-essential commerce such as hair salons, bars, restaurants and cinemas.
The measures, taken after the country recorded another steep rise in new infections and around 170 more deaths from the virus, make a deep recession in the first half of the year all but inevitable.
The Italian government now projects a budget deficit of 2.7% of GDP this year. It remains to be seen how the eurozone will accommodate what represents a clear, if inevitable and necessary, breach of its fiscal rules. The yield on Italy’s 10-year benchmark bond rose 17 basis points to 1.36%.
Elsewhere in Europe, Denmark shut its schools and universities for two weeks, while The Times of London reported that the U.K. government will force the rest of the English soccer season to be played behind closed doors (although the Cheltenham horse racing festival carried on as normal). Italian soccer player Daniele Rugani, a teammate of Cristiano Ronaldo at Juventus, tested positive for the virus, raising doubts that even a closed-doors regime would be tolerated by public-health authorities.