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Stock Futures Plummet on Europe Travel Ban

For the second time this week, equity index futures were locked limit down temporarily this morning as markets absorbed Trump’s announcement of a comprehensive travel ban from Europe to the US.

Markets tumbled yesterday after the World Health Organization declared the Covid-19 coronavirus a global pandemic. In an effort to contain the spread of the virus, President Trump issued a 30-day travel ban from Europe to the US, excluding the UK.

As stated by the White House, the ban “only applies to human beings, not goods and cargo.” Nevertheless, European stocks plunged to the lowest levels since June 2016 on the news.

In a single month, US equity index futures have erased all of 2019’s gains and Dow futures currently trade at levels not seen since December of 2018. This morning markets were halted for two hours after triggering the downside 5% lock limit. The lock limit has since been lifted.

Oil futures also extended declines due to an ongoing price war between Saudi Arabia and Russia. Last week, an OPEC production cut agreement was cancelled as talks between the two countries broke down.

Market Snapshot

  • Micro E-mini Dow Futures (MYM) -7.81%
  • Micro E-mini S&P 500 Futures (MES) -6.71%
  • Micro E-mini Nasdaq Futures (MNQ) -5.92%
  • WTI Crude Oil Futures (CL) -5.76%

Pictured above is today’s trading activity for Micro E-mini Dow Futures. Looking at the Volume Profile, most of the trading occurred prior to the halt indicated in yellow.

Bear Market Signal

The Dow Jones Industrial Average has now fallen more than 20% from its all time high on February 12th which many analysts agree indicates the start of a bear market. If this is indeed the case, it marks the end of an 11-year bull market.

Traders should always be aware of the risks involved in trading unpredictable and volatile markets. Risk management techniques should be employed whenever possible to minimize potential losses.

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