President Donald Trump imposed travel restrictions on "foreign nationals" from 26 European nations.
Access to the US will be banned for 30 days from Friday to prevent further cases of covid-19 entering the country, he said. The ban applies to the Schengen nations, 26 European countries with open-border agreements.
US permanent residents and citizens can travel but will be subject to more intensive screening. Citizens from the UK are exempt.
New Zealand's S&P/NZX 50 Index slumped 5 per cent yesterday on the news, with travel stocks particularly hard hit.
Auckland International Airport fell 7.4 per cent to $7.16 before being placed on a trading halt while the company assessed the implications of the announcement.
Air New Zealand sank 8.3 per cent to $1.76.
Investors have been seeking strong fiscal and monetary responses to the covid-19 outbreak from global policymakers.
"Markets were spooked by Trump's Europe travel ban but still no sign of a meaningful fiscal package, and the ECB's response also underwhelmed. Equity moves were vicious, with trading halts featuring," said ANZ Bank
The European Central Bank didn't cut interest rates any further yesterday, but did announce measures to support bank lending and expanded its asset purchase programme by 120 billion euros. The ECB's main rate is already at -0.5 per cent.
The US Federal Reserve, meanwhile, announced it was pumping up to US$1.5 trillion into the financial system to provide a cushion.
The move was made "to address highly unusual disruptions in Treasury financial markets associated with the coronavirus outbreak," it said.
The Volatility Index - Wall Street's fear gauge - jumped 32 per cent to 71.30, the highest level since the start of the 2008 global financial crisis.
