Trump’s
speech to nation falls flat as Italy’s PM brings in further quarantine measures
in wake of WHO declaring a pandemic
Coronavirus
– latest updates
Martin
Farrer
Thu 12 Mar
2020 05.40 GMTLast modified on Thu 12 Mar 2020 05.50 GMT
A dramatic
attempt by Donald Trump to limit the spread of coronavirus by banning travel to
the US from most of Europe for 30 days has failed to stem heavy losses on
financial markets and prompted one top economist to warn that a global
recession was now “highly probable”.
In a sombre
primetime address from the Oval Office on Wednesday evening, the US president
boasted that the travel ban and series of other measures designed to cushion
the economic blow of the outbreak amounted to “the most aggressive and
comprehensive effort to confront a foreign virus in history”.
But Asian
stock markets and Wall Street futures trading plunged deep into the red even as
Trump laid out his plans, with investors betting that the $250bn package would
not be enough to reverse the creeping shutdown of the world’s largest economy.
The US
suspension will not apply to the United Kingdom and Ireland, and does not apply
to American citizens, Trump said, as he attempted to blame the European Union
for “seeding” hotspots in America. Confusion following Trump’s address later
forced officials to clarify that cargo, as well as non-Schengen countries in
Europe, would also be exempt from the ban.
Observers
said the speech, in which Trump gave the sense of resisting a foreign invasion,
struck a strange tone. David Litt, who wrote speeches for Barack Obama, said:
“As a former presidential speechwriter, my careful rhetorical analysis is that
he’s gonna get us all killed.”
Elsewhere,
Italy saw its restrictions on daily life increase after the government ordered
the closure of all shops apart from pharmacies and grocery stores and other
essential stores. The whole country of 60 million people was placed into
lockdown on Tuesday and is the second-worst affected nation with more than
12,000 cases.
The
outbreak also claimed its most high-profile cases so far when Hollywood
superstar Tom Hanks announced that he and wife, Rita Wilson, have tested
positive for the coronavirus. The pair are in Australia where the 63-year-old
actor is making a film about Elvis directed by Baz Luhrmann.
An
unidentified UK cabinet minister has also gone into voluntary self-isolation
pending test results after contact with infected health minister Nadine
Dorries.
In other
developments, the NBA basketball league was suspended indefinitely after a Utah
Jazz player tested positive, and New York and Chicago cancelled their St
Patrick’s day parades next week, the first time it has happened in more than
250 years.
Global
infections have now risen above 126,000 and there have been 4,600 deaths caused
by what the World Health Organization has now officially declared a pandemic.
China still accounts for the majority of victims but official figures from the
country on Thursday said there had been just 15 new infections in the past 24
hours.
The number
of US cases has risen to more than 1,300, with the sharp increase in recent days
one of the factors forcing Trump to respond more forcefully to the outbreak
after consistently trying to play down the threat.
But he
still attempted to deflect blame, calling it a “foreign” virus and saying that
there had been “dramatically fewer cases” in the US than in Europe.
“The
European Union failed to take the same precautions and restrict travel from
China and other hotspots. As a result, a large number of new clusters in the
United States were seeded by travellers from Europe,” he said. “After
consulting with our top government health professionals, I have decided to take
several strong but necessary actions to protect the health and wellbeing of all
Americans.”
The US
state department later issued revised guidance advising Americans to reconsider
all overseas travel.
The US
economic measures revealed by Trump include financial relief for workers who
are ill, quarantined or caring for others due to the illness, Trump said,
adding that the US treasury would defer tax payments without interest or
penalties for certain businesses and individuals. The financial system would be
bolstered by an extra $200bn in liquidity, he said, and small businesses would
be given access to more capital and liquidity.
But Mohamed
El-Erian, the highly respected chief economist of insurer Allianz, said such
measures would not do enough to prevent the shutdown of economies across the
world, which was now gripped by the “economics of fear”.
“The
advanced economies are now likely to feel the full force of economic sudden
stops that destroy both supply and demand at the same time,” he said. “The
collapse in economic activity risks being amplified by the economics of fear,
uncertainty and adverse economic-financial feedback loops.
“I believe
there is a high probability of global recession.”
Tom Hanks’
revelation that he had become infected was also seen as significant factor,
given the spread of the contagion to such a well-known person.
“The news
about Tom Hanks will fuel uncertainty, prompting people to disengage more from
economic activities,” said El-Erian.
His gloomy
analysis was reflected in financial markets in Asia Pacific, which plummeted
into full selling mode during and after Trump’s address. The ASX200 in Sydney
was down 7.2%, in Tokyo the Nikkei was off 5.4% and Hong Kong fell 4.3%.
Shares in
airlines were especially badly hit. Australia’s Qantas fell 11%, Singapore
Airlines was down 4%, as was Hong Kong’s Cathay Pacific Brent crude oil, the
international benchmark, was badly affected by new of the travel ban, falling
5.3% to $33.88.
The price
action pointed to more selling in Europe and the US when markets open on
Thursday. The Dow Jones industrial average entered bear market territory on
Wednesday – defined by a 20% fall from its most recent high – and futures
trading suggested it would lose another 4.4% on Thursday. The FTSE100 is set to
shed 5.8% in London.
“The travel
ban from Europe has definitely taken everyone by surprise,” said Khoon Goh,
head of Asia Research at ANZ in Singapore. “Already we know the economic impact
is significant, and with this additional measure on top it’s just going to
multiply the impact across businesses. This is something that markets had not
factored in ... it’s a huge near-term economic cost.”
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