European stocks are set for their biggest decline on record Thursday after the European Central Bank kept interest rates on hold and President Donald Trump issued a sweeping European travel ban to combat the global coronavirus pandemic.
The ECB its three main interest rates -- including the 50 basis point charge it applies to overnight deposits at the central bank -- but pledged instead to re-open its dormant quantitative easing program to support the economy as it grapples with the coronavirus pandemic. Loses were extended, however, after ECB President Christine Lagarde said it was not the central bank's job to narrow interest rate differentials in Eurozone government bond markets.
The Stoxx 600 benchmark was seen 9.5% lower by mid-afternoon trading, taking the broadest measure of regional share prices to the lowest levels in at least seven years. while Britain's FTSE 100 tumbled 9.3% to pull it back below levels last seen during the Brexit sell-off in the summer of 2016. Germany's DAX performance index fell 9.6% while France's CAC-40 plunged 10%.
After vowing earlier this week to deliver a major economic support package to cushion the blow of the rapidly-expanding virus, which has now infected more than 1,300 Americans, Trump pivoted to issuing the 30-day travel ban from the Oval Office last night, sending global markets into a tailspin.
"We are marshaling the full power of the federal government and the private sector to protect the American people," Trump said in the nationally televised address. "This is the most aggressive and comprehensive effort to confront a foreign virus in modern history."
The ban, which will exclude travel between the U.S. and the United Kingdom, added further headline pressure to market already reeling from last night's 1,400-plus point decline for the Dow Jones Industrial Average, a move that dragged the benchmark into so-called bear market territory -- or 20% lower from its February 12 peak -- and ended a bull market that began on March 9, 2009.