March 12, 2020 / 3:27 AM / 23 days ago

Japan shares dive deeper into bear market as Trump stuns with Europe travel ban

SYDNEY, March 12 (Reuters) - Japanese stocks plummeted on Thursday, with the major indexes at three-year lows and in bear market territory, as the United States rattled markets by announcing a ban on all travel from Europe and world health officials declared the coronavirus a pandemic.

The benchmark Nikkei average sank 5.2% to 18,412.24 points by the midday break, its lowest level since April 2017, to fall into bear market territory.

If sustained through to the end of the day, it will be the biggest one-day fall since November, 2016.

The Nikkei’s volatility index, a measure of investors’ volatility expectations based on option pricing, jumped more than 10% to 52.09, its highest level since November 2011.

The World Health Organization described the new coronavirus as a pandemic for the first time on Wednesday, adding that Italy and Iran were now on the frontline of the disease and other countries would soon join them.

U.S. President Donald Trump said late Wednesday that Washington will suspend all travel from Europe, except from the United Kingdom, to the United States for 30 days starting on Friday. Trade with Europe, however, won’t be affected by the curb.

He also announced some other steps, including instructing the Treasury Department to defer tax payments for entities hit by the virus.

But investors were hardly convinced those measures will turn around the global economy as concerns grew that the number of infections could quickly snowball in many countries.

“I think markets are sending a clear signal to the White House that the measures announced today were too little too late,” said Mick McCarthy, chief strategist at CMC Markets in Sydney.

The broader Topix shed 4.8% to 1,318.96, its lowest since November 2016, to dive deeper into bear market.

All of the 33 sector sub-indexes on the Tokyo Stock Exchange traded lower, with sea transport, real estate and precision machinery being the worst three performing sectors, while the TSE REIT index plunged 6.7%.

Among major names, Toyota Motor Corp lost 4.0%, SoftBank Group Corp dived 9.0% and Yaskawa Electric Corp tumbled 7.9%.

Elsewhere, the index of Mothers start-up shares tumbled 5.2% to a seven-year trough.

Reporting by Tomo Uetake; Additional reporting by Alun John; Editing by Shri Navaratnam

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