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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.

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.

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