Selloff intensifies, as airlines bear the brunt of travel fears

European markets are following their Asian and US counterparts lower, as the fears over the potential economic impact of the coronavirus sends traders running for shelter. Meanwhile, travel stocks are also under the microscope.

  • Market selloff brings weekly decline of historic proportions
  • Travel companies under pressure as demand slumps
  • Central banks gear up for action, but are their tools blunt to fight a virus?

Market panic intensifies

Global stock markets are in panic mode today, as heightened fears over the potential economic implications of a global coronavirus pandemic send traders running for shelter. The selling seen over the course of this week has reached historical levels, with the Dow currently on course to post the seventh-biggest weekly decline on record. While traders are convinced over the risk of holding stocks, they are less consistent when it comes to choosing where to park their assets.

The lacklustre gold performance overnight saw traders shift into the yen, with the currency seemingly back in the driving seat as the number one haven in the forex market.

JP Morgan advice for employees to avoid non-essential travel is an early insight into how things could progress if the virus continues to spread throughout the western world.

Virus news travels fast

The travel sector will certainly be in the limelight in the event of further travel restrictions. While declining oil prices could help lower business costs, the prospect of a slump in demand is hitting the travel sector hard. Updates from IAG and easyJet acknowledge the decline in demand that has already started to emerge, with IAG planning to cut routes across their European short-haul network in the coming days.

Time for intervention?

This morning has seen central banks take tentative steps to assure markets of their willingness to intervene where necessary. While expectations of a Fed rate cut grow, comments from ECB member Vasiliauskas point towards a possible extraordinary governing council meeting if required.

However, beyond helping to alleviate the current stock market collapse, there is little any central bank could do to alleviate the potential repercussions of a global pandemic.

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