European markets posted their worst one-day drop in history on Thursday, as investors reacted to President Donald Trump‘s decision to impose restrictions on travel to the U.S. from Europe, and the European Central Bank’s decision not to cut interest rates.
The pan-European Stoxx 600 had plummeted 11% by the close, with travel and leisure stocks sinking 12.8% following Trump’s announcement of a ban on European travel.
Trump said Wednesday that the U.S. will suspend all travel from 26 European countries to the U.S. for 30 days to curb the spread of coronavirus. The new rules will go into effect on Friday night. The measures will affect the nations in Europe that are part of the visa-free Schengen area. The U.K. and Ireland are exempted from the restrictions, as are American citizens who have undergone virus screening.
“These restrictions will be adjusted subject to conditions on the ground,” Trump said, blaming Europe for not taking adequate action to control the spread of the virus; Italy is the worst hit country outside China and a nationwide lockdown continues there.
The World Health Organization (WHO) declared the coronavirus outbreak a pandemic on Wednesday. There are at least 120,000 confirmed cases of the virus worldwide and at least 4,717 people have died worldwide.
The European Central Bank decided Thursday not to cut interest rates, despite market expectations for a reduction amid the ongoing coronavirus outbreak, which disappointed markets and deepened the session’s already significant losses. Analysts had expected a 10 basis point cut.
The central bank did announce measures to support bank lending, and expanded its quantitative easing (QE) program by 120 billion euros ($135.28 billion).
Dufry shares plummeted 41% after the Swiss travel retailer issued guidance amid concerns over the impact of the coronavirus, while Tullow Oil plunged 31% as oil prices continue to suffer amid concerns over a price war between OPEC and Russia.
British cinema operator Cineworld cratered by more than 24% after warning on Thursday that it could breach its existing debt arrangements if the impact of the coronavirus over the next few months reaches a worst-case scenario.