It is said that "great cures for great ills". This is what the United States of America did this Thursday morning through the announcement of its current President Mr Donald Trump. In a brief and solemn address to the White House, he made public the decision of the United States to suspend all flights from Europe. Only the United Kingdom is the exception to this measure taken to prevent the spread of Covid-19 on American soil.
During this period, U.S. citizens and permanent residents in the United States will have the opportunity to return. The U.S. President has called on Americans to stop traveling abroad. According to AxiCorp analyst Stephen Innes, Asian trading rooms were saying the same thing after the announcement: "Sell, sell, sell, because travel restrictions mean even less global economic activity. A new reality begins with Asian stock exchanges.
In a tweet, Donald Trump said it is "important for countries and companies to know that trade will not be affected in any way" by travel restrictions from European countries. President Trump's reaction is far from convincing investors and the financial markets as a whole. The American government will lower payroll taxes to relieve American households and businesses in difficulty because of the virus.
This Thursday, the Nikkei flagship index closed down 4.41% to 18.559.63 points while the Topix broad index lost 4.13% to 1.327.88 points. The Tokyo Stock Exchange is in a continuation of misformation after a bad start. The safe haven currency for investors, the yen, has seen its value appreciate against the euro and the dollar following the announcement of the USA on Thursday. In mainland China, Shanghai is at -1.88% and Shenzhen at -2.73%.
As it rang 06:30 GMT yesterday, the USD traded at 103.65 Yen, while the day before it was worth 104.42 Yen at the close of the Tokyo Stock Exchange. As for the euro, it climbed to $1.1293 from $1.1279 at 19:00 GMT the day before. The Hang Seng Index on the Hong Kong Stock Exchange is down sharply by -3.67%. These economic movements are unfavourable to Japanese exporting groups.
Oil prices have plunged into the red even though they were rising timidly. The declaration of the United States of America suspending flights from Europe thus caused the oil market to fall drastically. The latter has been at half mast since the beginning of this health crisis and even before that.
The price of a barrel of London Brent fell by 4.39% to $34.22 and the price of a barrel of US crude fell by 4.21% to $31.59. It should be remembered that oil producers have been unable to agree to reduce supply since the beginning of the week. With these figures, the oil market is posting its worst drop in 30 years and plummets by about 25% despite discussions among Gulf producers.