The New Zealand share market has extended its losses, plunging more than 5 per cent in afternoon trading after President Donald Trump announced his decision to suspend travel from Europe to the US.
Trump's sweeping new travel restrictions in a bid to combat the spread of the coronavirus followed another brutal day's trading on local markets after Wall Street closed in bear market territory.
By 3.30pm, the S&P/NZX50 Index was down 560 points, or 5.13 per cent at 10,587.
Crude oil prices, which had been in recovery mode since Monday's big fall, slumped again on news of the US/Europe travel ban.
Benchmark Brent and West Texas crude were both off six per cent this afternoon.
The US benchmark stock indices all closed more than 4 per cent weaker last night, with the Dow falling 5.9 per cent. It is down more than 20 per cent from its February 12 peak.
Futures trading was halted for Wall Street's Dow Jones Index as a five per cent fall triggered the emergency circuit breaker.
Across the Tasman, The S&P/ASX 200 Index fell 5.8 per cent having dropped more than 16 percent so far this year.
Chris Smith, general manager of CMC Markets New Zealand, said the NZX and ASX took their lead from Wall Street, where investors are closely watching government responses to the virus outbreak.
"We have reached a technical bear market in the US, so there are plenty of opportunities out there, but it depends on your time horizon."
On the local market, Vista Group International was the hardest hit, falling 11 per cent to $2.50, after it said it wasn't expecting any significant reopening of cinemas in China until early April.
Retirement stocks also fell as investors remain wary of aged-care firms whose residents are vulnerable to the virus.
Oceania Healthcare had fallen 6.9 per cent to 94 cents, while Summerset Group dropped 5.5 per cent to $6.22. Ryman Healthcare declined 3.7 per cent to $13.68.
"Retirement stocks both locally and in Australia have been impacted as the coronavirus death rate for the elderly is much higher," Smith said.
He said investors hate uncertainty and as coronavirus headlines remain negative, investors are staying on the side lines.
"There is a lack of buyers stepping into the market at the moment, it is certainly a trader's market," he said.
Investors sold off 3.46 million Air New Zealand shares, taking the shares 4.4 per cent lower to $1.73. The company dropped its earning guidance this week, saying it wasn't able to predict the extent of the coronavirus disruption. Smith said without certainty investors would be unlikely to back the stock in these volatile trading periods.
"Globally, we have had 10 trading days on the US market with more than 3 percent up or down movements," Smith said. "In the entire nine years prior, we only had 11 days of 3 percent moves up or down."
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"Our market has often been slightly more defensive than Wall Street, but there is no getting away from the concerns about the continued spread of this virus," Mark Brown, chief investment officer at Devon Funds Management, said.
Fund managers have grown increasingly concerned about the spread of the virus, particularly in Italy, which has been placed in total lockdown.
WHO Director General Tedros Adhanom Ghebreyesus told reporters in Geneva that organisation was "deeply concerned" about the alarming spread and severity of the outbreak.
"We have, therefore, made the assessment that Covid-19 can be characterised as a pandemic."
According to the WHO, the number of cases of Covid-19 outside of China has increased 13-fold in the past two weeks and the number of affected countries has tripled.
The latest data show 121,564 confirmed cases and 4,373 deaths from Covid-19.
Bank of New Zealand market strategist Jason Wong said the US government's policy response was disappointing, given President Donald Trump's promise of a big stimulus package hadn't emerged and congress pushed back on tax relief measures.
"This dithering has impacted market sentiment, with yesterday's surge in the S&P500 of 4.9 per cent, driven on hope of policy announcements, has given way to a chunky 4-plus percent fall so far overnight," Wong said in a note.
Boeing was particularly hard hit, losing more than 10 per cent after it said it would fully draw down a US$13.8 billion loan as early as Friday. Airlines have been putting off capital spending in response to dwindling travel as a result of the outbreak.
Across the Atlantic, the Bank of England joined other central banks and cut its key rate by half a percentage point to 0.25 per cent in the hope of cushioning the economy.
And the British government also unleashed 30 billion pounds in spending and tax relief, immediately after the rate cut.
ANZ, in a research note, said a New Zealand recession and a more prolonged slowdown was now looking "highly probable".
Additional reporting, BusinessDesk