Morning Brief

Markets Dive as Fed Offers Trillions to Stem Crisis

Fed intervention was not enough to stop one of the darkest days since 1987 as push for further U.S. government action increases.

US Federal reserve Chairman Jerome Powell gives a press briefing on March 3, 2020 in Washington, D.C.
US Federal reserve Chairman Jerome Powell gives a press briefing on March 3, 2020 in Washington, D.C. ERIC BARADAT/AFP

Here is today’s Foreign Policy brief: Markets tumble again amid coronavirus turmoil, the EU responds to Trump’s travel ban, and the U.S. strikes militants in Iraq.

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Coronavirus Continues to Drive Market Turmoil

Uncertainty over the coronavirus and dismay at the U.S. response continues to wreak havoc in financial markets. The Dow Jones Industrial Average and S&P 500 suffered their worst drops—of close to 10 percent—since the stock market crash of 1987, known as Black Monday. An announcement of an injection trillions of dollars in liquidity by the Federal Reserve to halt “temporary disruptions” in the market quelled trading fears for a short period, before markets plunged again.

In a day of drops, even so-called haven assets were not immune. Bitcoin has now lost 50 percent of its value since February, and the price of gold declined.

U.S. delays on aid package. The U.S. government’s response to the coronavirus outbreak is currently caught between the White House and Capitol Hill, as lawmakers and administration officials stalled on how best to administer an aid package to citizens. Both sides hope to reach a deal by the end of today.

State of play. The coronavirus has now infected more than 128,000 people worldwide and led to the deaths of over 4,700. The U.S. still lags behind other developed nations in the rate of testing: According to the Center for Disease Control and Prevention, just over 11,000 tests have been conducted in the United States to date, by comparison South Korea has already tested 230,000 cases. As Foreign Policy’s James Palmer writes, the threat to the United States is now very much within its borders.

What We’re Following Today

EU responds to travel ban. The European Union said it “disapproves of the fact that the U.S. decision to impose a travel ban was taken unilaterally and without consultation,” following the Wednesday announcement by U.S. President Donald Trump banning travel from the 26 countries of the Schengen area. The decision led to chaos and confusion in European airports, as travelers rushed to return to the United States before the ban takes effect at midnight on Friday.

Merkel sounds the alarm. German Chancellor Angela Merkel said that the growing public health crisis looms even larger than the panic of 2008, as her government prepares a response. “It is our task first of all to save people’s lives, as best we can, and secondly to keep economic activity going,” she said. Germany currently has around 1,600 confirmed cases of coronavirus.

U.S. strikes Iran-backed groups. The United States carried out airstrikes in Iraq in an escalation of its conflict with Iran. U.S. officials said the five targets hit were weapons storage facilities of Kataib Hezbollah, an Iran-backed militia. The strikes were in retaliation for a rocket attack on a military base in Taji, Iraq, that killed three service members—two from the United and States and one from the United Kingdom. Fourteen others were injured in the Taji attack.

Politicians continue to test positive. The COVID-19 outbreak knows no boundaries, and celebrities and world leaders are becoming infected. Fabio Wajngarten, Brazilian President Jair Bolsonaro’s press secretary, has tested positive for the coronavirus. Wajngarten was part of Bolsonaro’s entourage on a recent trip to the United States and was pictured standing beside President Trump. Bolsonaro himself is now awaiting the results of a coronavirus test.

Elsewhere, Australia’s home affairs minister, Peter Dutton, has now tested positive. He recently met with top U.S. officials including Attorney General William Barr and was pictured standing next to Ivanka Trump last week.

Sophie Grégoire Trudeau, the wife of Canadian Prime Minister Justin Trudeau has now also tested positive for the virus. Both Trudeaus were already in self-quarantine. Justin Ling, writing in Foreign Policy, argues that President Trump should consider doing the same.

Keep an Eye On

Diplomatic shutdown. As mass cancellations take hold in every facet of life, diplomacy is not immune. In New York, the United Nations announced its first known case of a diplomat contracting the coronavirus—a member of the Philippines’ mission. In Foreign Policy, Colum Lynch and Robbie Gramer report on the wider effect the coronavirus is having on the business of diplomacy, as global institutions shut their doors to contain the pandemic.

Brexit talks postponed. Trade negotiations between the United Kingdom and European Union have been placed on hold due to the coronavirus outbreak. Talks were due to take place next week in London, and alternative plans have not yet been laid out. Any delay makes the prospect of a Brexit deal within the year increasingly unlikely.

Odds and Ends

In dark times, even moonshine can brighten things up. That’s certainly the case in Greece, where authorities have found a use for the 155 metric tons of seized bootleg alcohol sitting unused in customs houses around the country: Turn it into sanitizing liquid. Greek authorities are now hunting for a manufacturer to follow through on the plan.

That’s it for today.

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Colm Quinn is an Irish freelance journalist based in Washington, D.C. Twitter: @colmfquinn

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