Europe closes borders

The coronavirus spread across Europe is intensifying and countries are moving into uncharted territory in terms of economies and businesses as European borders are closing, schools are shutting down and most large gatherings are being cancelled.

FED 1

The coronavirus spread across Europe is intensifying and countries are moving into uncharted territory in terms of economies and businesses as European borders are closing, schools are shutting down and most large gatherings are being cancelled.

The FTSE is trading down almost 7% this morning while the EuroStoxx lost 8.8%, reflecting the overall fall of dominoes in the European markets. To try and gauge which way the markets will jump, the number of new cases is not painting the full picture.

Markets focusing on cross-border communication

It is now more about which travel routes remain open, which borders still allow flow and which businesses are still operational. Over the weekend the countries with only a small number of cases like Poland, Denmark and the Czech Republic closed their borders with Germany where the numbers are rising, while Spain shut itself off after it become Europe’s second worst hit country after Italy.

The number of cases in Switzerland is rising fast, possibly because of proximity to Italy, and Austria and the Scandinavian countries are also struggling to contain the virus.

The losses in the travel industry have moved onto another level with TUI dropping 35% and easyJet declining 29% as investors call into question whether these companies will be able to last the duration of the coronavirus. In the black is only Reckitt Benckiser, the producer of antiseptic Dettol, immunity supplement Airborne and bleach cleaner Harpic.  

Fed cuts interest rates to zero

The Fed’s decision last night to cut interest rates to zero to help the US economy ride through the crisis now feels like a small barrier in the way of the tidal wave that is coming. The dollar is the only currency pulling in investors and sterling is trading at $1.23.

More from UK 100

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.