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Coronavirus: European Markets Slide 8% as Governments Impose Safety Restrictions

The coronavirus outbreak has gotten increasingly worse since the first cases last year. Because of the situation, governments all over the world have begun imposing different lockdown levels to curb the spread of the highly contagious disease. With a large number of Europeans currently confirmed with COVID-19, residents have been largely restricted. These restrictions, while necessary to improve the situation, have negatively impacted European markets as they are significantly plummeting. There also is a chance that they will plunge more since there is currently no way to tell when things would get better.

Spain, for example, has announced a complete lockdown in the country, for all residents. The restriction will last 15 days and only essential movement, such as health needs, would be permitted. The governments of both Germany and France have placed similar but fewer restrictions on movement in both countries and have also beefed up their borders. Generally, all of these have dented stocks in Europe.

The Stoxx Europe 600 index crashed 8% in response to the partial paralysis. In the last month, the index has lost over 36% and a disappointing 33.65% year-to-date (YTD) loss. Last week alone, it lost 18%. Furthermore, Germany’s DAX has lost 7% with the UK FTSE 100 falling over 6% and France’s CAC 40 shedding more than 8%. Basically, there is a bloodbath in European stocks.

The number of European cases is still on the increase with many new cases in other countries traced to European returnees. It might take a while before these stocks recover.

As expected, the restrictions have caused a sharp plunge in the travel market. Airline tickets have become very cheap because people are simply not flying as much anymore. In many parts of the world, once-bubbly streets are now completely empty. Popular tourist destinations are no longer seeing the volume of travelers they used to. Because of this, airline stocks are crashing.

U.S. President Donald Trump recently announced a travel ban on Schengen countries. The administration has now extended the ban to include both Ireland and the U.K. This has affected not just the airlines, but also companies in the hospitality business.

The TUI tourism company announced that it will suspend its business as a result of the same issues. In response, the company’s stock lost a whopping 35%. Also, EasyJet has said it is halting about 100 flights across several European destinations. The company attributed the decision to COVID-19, adding that there could be “further significant cancellations.” The company also plans to put some employees on unpaid leave. EasyJet Plc (LON: EZJ) stock is now down more than 21%.

British Airways has also suspended 75 percent of its flights. The company added that it might lay off some of its employees, as it has seen “a substantial decline in bookings” British Airways parent company IAG has shed almost 24%.

If the outbreak fails to improve, stocks might stay down for much longer.

Coronavirus: European Markets Slide 8% as Governments Impose Safety Restrictions

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