European markets gave up early gains on Tuesday with the fast-spreading coronavirus putting the continent in shutdown mode and fueling fears of an impending recession.
The pan-European Stoxx 600 slipped 1.9% amid a choppy session, having gained 3% at the opening bell. Travel and leisure stocks plunged another 9.3% as shutdowns continue to hammer the sector.
Europe’s lockdown over the coronavirus continues to dominate headlines, along with anticipation of fiscal stimulus from governments around the world after a slew of central banks unveiled emergency monetary policy measures within the past two weeks.
Italy and Spain remain the worst hit countries but France and Germany have also reported sharp rises in cases. The French president announced that the European Union would be closing its external borders on Tuesday.
Emmanuel Macron also said he was ordering people in France to stay at home for up to 15 days because of the coronavirus outbreak.
In the U.K., the government stopped short of closing schools but stepped up its advice to the public, with U.K. Prime Minister Boris Johnson telling the country on Monday to avoid social contact.
“Now is the time for everyone to stop non-essential contact with others and to stop all unnecessary travel,” Johnson said at a press conference. “You should avoid pubs, clubs, theaters and other such social venues,” he added.
In the U.S. on Monday, President Donald Trump said the country could be heading for a recession due to the coronavirus outbreak. The Dow Jones Industrial Average suffered its worst day since the “Black Monday” market crash in 1987 Monday and its third-worst day ever. This was despite the Federal Reserve embarking on a massive monetary stimulus campaign to curb slower economic growth amid the coronavirus outbreak.
Stocks in Asia Pacific were mixed Tuesday as they seesawed in reaction to Wall Street’s plunge and the Philippines shut its markets temporarily. Australian stocks surged 6% to lead gains.
A survey from the ZEW economic research institute Tuesday showed that euro zone economic sentiment plummeted in March, falling to -49.5 from +10.4 in February.
Stocks on the move
Volkswagen announced Tuesday that it will suspend production from Friday, warning alongside its full-year results that 2020 would be a difficult year. The German automaker’s shares fell 0.9% by noon in European trade.