Brent crude futures, the global oil benchmark, were down nearly 5.3%, last trading at $33,90 per barrel.
Investors are struggling to see the endgame and “traders are hammering the sell button now thinking the US government has fallen well behind the curve in its [coronavirus] response,” said Stephen Innes, a market strategist at AxiCorp.
Trump’s announcement — made during a televised address on Wednesday — initially sowed confusion. He described the suspension as affecting “Europe,” rather than the specific collection of countries that US authorities later clarified.
The president also said that the “prohibitions would not only apply to the tremendous amount of trade and cargo, but various other things as we get approval,” but later corrected himself on Twitter to say that “trade will in no way be affected” by the travel restriction.
“The restriction stops people not goods,” he said.
And US citizens and permanent residents who are in Europe will still be allowed back into the United States during the 30-day period, though will be screened upon entry and face quarantine or restrictions on their movement.
Even so, it remains unclear whether airlines will still fly the routes if passenger demand from European nationals dries up because of the ban.
“Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell sell sell sell after a massively negative signal from overnight trading in US markets it just fell in your lap,” Innes wrote.
In his speech, Trump spelled out some other areas where he hopes to bolster a flagging economy, including deferring tax payments for some individuals and companies.
He said he would seek to provide “unprecedented” action that would allow sick workers to stay home and still be paid.
And he called on Congress to provide payroll tax relief to Americans, though that idea has been met with some resistance on Capitol Hill.
But Trump didn’t include many concrete measures to support the economy, wrote Jeffrey Halley, a market analyst with Oanda, in a research note. Investors were hoping for a much larger economic rescue package, and a comprehensive medical plan to address the threat posed by the coronavirus.
“That has probably disappointed markets more than anything,” Halley added.