Stocks around the world have swung lower, even after the Federal Reserve in the US announced a tidal wave of support for lending markets, going way beyond the “bazooka” it had already unloaded.
The scale of the Fed’s moves impressed investors, but stocks still fell in the first few minutes of trading as worries continue to rise about the economic pain being caused by the coronavirus outbreak.
Central banks are doing what they can to support the economy as more states and communities close down, but investors want to see the US government do its part as well.
Congress was debating a nearly two trillion dollar (£1.71 trillion) rescue package for the economy over the weekend, but top White House officials and congressional leaders are struggling to finalise it.
The S&P 500 was down 3.6% in afternoon trading and was close to its lowest point since late 2016. The Dow Jones Industrial Average fell 746 points, or 3.9%, to 18,427, and the Nasdaq was down 1.3% after earlier being up 1.5%.
US stock futures and European markets got a boost early in the morning, before the US began following the Fed’s announcement. But the gains quickly diminished.
Earlier, India’s Sensex plummeted 12.1% after a sharp drop on opening triggered a circuit breaker halt to trading.
Singapore’s benchmark plunged 7.7% after the city announced a sharp increase in confirmed infections and its first two deaths.
Shares also fell 7% in Bangkok.
However, Japan’s Nikkei 225 index held steady, gaining 1.9% by midday on Monday.
Investors appeared to be encouraged by the likelihood the International Olympic Committee might postpone, rather than scrap, the Tokyo Games.
Markets reopened to an altered business landscape as lockdowns and closures intended to halt the spread of the new coronavirus expanded over the weekend to include many cities around the world, and the number of people infected surged past 336,000.
“Risk aversion appears here to stay as investors become more fearful that this could be the worst global recession during peacetime,” Edward Moya of Oanda said in a commentary.
“Every passing day it seems lockdown efforts are intensified globally thus it seems financial markets will remain nervous until we see the infection rate improve in both the US and Europe,” Mr Moya said.
Sydney’s S&P/ASX 200 fell 5.6% to 4,546.00 after plunging more than 8% sharply just after the open.
Australia announced a 66.4 billion Australian dollar (£33 billion) stimulus package on Sunday. That is in addition to an earlier mandated 10 billion dollar (£8.5 billion) package and other stimulus from the central bank.
South Korea’s Kospi lost 5.3% to 1,482.46. Hong Kong’s Hang Seng index shed 4.6%, to 21,756.57, while the Shanghai Composite index slipped 3.1% to 2,660.17.