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Global Financial Markets in Turmoil Over Coronavirus Outbreak

Rising fears over the global coronavirus outbreak have led to a meltdown in financial markets all over the planet. With the situation changing regularly, travel restrictions from the US and fears of similar precautions in other countries have caused travel companies in particular to suffer.  

The Latest Stock Market News

At the time of writing, the FTSE has plummeted by over 7%, reaching its lowest level since 2012. This came after President Donald Trump confirmed that Europeans from 26 different countries wouldn’t be allowed to travel to the US for the next 30 days. The UK and Ireland are excluded from the restrictions.

The markets reacted quickly to this news, as stocks in every major exchange fell. The Nikkei 225 in Japan closed at 4.4% down and in the US the Dow Jones lost close to 6% very quickly. In the FTSE, there wasn’t a single company that avoided losing value.

The travel industry has been hammered recently, as flights take off virtually empty and people avoiding travelling as much as possible. This has been reflected in the share prices of travel and leisure firms, with many of them losing over 14% from their price. 

The UK government is expected to announce drastic restrictions shortly. It is likely that this leads to further carnage on the markets, especially if their plans are tougher than has been predicted to date. 

What About the Budget Moves?

Right now, the special measures announced recently in the Budget don’t appear to have had any major positive effect. Chancellor Rishi Sunak introduced a range of measures aimed at helping the country to get through the current health crisis.

These include a £5 billion emergency response fund that will aid the NHS and other public services. Small businesses with fewer than 250 members of staff will be refunded sick pay that they pay out for two weeks.  Self-employed workers are also now allowed to claim contributory Employment Support Allowance.

Small companies will be able to get hold of business interruption loans to a maximum of £1.2 million. A further boost for businesses came with the news that business rates in England will be partially abolished.

This applies in the retail, hospitality and leisure sectors, in cases where the rateable value is under £51,000. While these new measures have been broadly welcomed by the business community, there is also a sense of uncertainty that could lead to growth in international debt collection numbers.

In the US, some similar measures have been introduced, with capital and liquidity to be provided to small companies that are affected by the current outbreak. Some analysts feared that the American leader hasn’t gone far enough though, with a total of a 20% drop on the Dow Jones seeming to suggest that traders agree with this assessment. 

The Long-Term Impact

Right now, it isn’t clear what the long-term impact of these factors will be. It has been suggested that the situation could lead to a global recession. For the moment, there are still too many unknown factors around certainty about this.