U.S. stock futures, world shares and Treasury yields all headed lower on Wednesday, pointing to sustained doubts about the ability of governments and central banks to combat the economic headwinds caused by the novel coronavirus.
The fresh downdraft in Asian trading hours followed two tumultuous days marked by a violent global selloff and a sharp rebound.
Japan’s Nikkei 225 declined 2.3% to close at its lowest level since December 2018. Australia’s S&P/ASX 200 dropped 3.6%, hitting its lowest since January 2019, and entering a bear market, typically defined as a decline of at least 20% from a recent peak.
By midafternoon in Hong Kong, the Hang Seng Index stood 0.6% lower and the Shanghai Composite had also shed 0.6%.
U.S. stocks had soared in frenetic trading Tuesday, wiping out much of the losses they suffered just a day earlier in their biggest selloff since the financial crisis. The S&P 500 rose 4.9%.
“It’s too early to call this stabilization, and it’s too early to position for a rebound here,” said Mayank Mishra, a global macro strategist at Standard Chartered Bank in Singapore.
“Financial markets will continue to focus on the economic implications from the virus, and right now the global outlook for growth is not rosy. Those are the forces that markets are reacting to,” said Mr. Mishra.
E-mini S&P 500 futures dropped 2.5%, suggesting U.S. stocks could be weaker when they start trading later on Wednesday.
The 10-year U.S. Treasury yield stood at 0.684%, down from 0.743% on Tuesday. Bond yields, which move inversely to prices, have swung wildly in recent days, with the widely watched 10-year yield tumbling from above 1% last Thursday to a record intraday trough below 0.4% on Monday.
Mr. Mishra said while markets had already priced in likely interest-rate cuts and other support from central banks, government action moved at a slower pace. “The fiscal response is a slower-moving beast, so let’s see how that helps stabilize global financial markets,” he said.
The Federal Reserve earlier this month cut its key interest rate by 0.5 percentage point to a range of 1% to 1.25%. Many investors expect a further cut at the Fed’s scheduled meeting next week, which concludes on March 18.
A push by President Trump to suspend the payroll tax to boost the economy fell flat on Capitol Hill on Tuesday, as lawmakers of both parties said they preferred targeted measures to assist hourly workers and the battered travel industry.
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