HONG KONG: Despite assurances of stimulus packages by multiple countries due to the coronavirus the Asian markets remained bearish as investors struggled to build on an early rally.
With borders being shut and countries going into lockdown, there is a broad expectation the world economy will plunge into recession as markets convulse.
Dealers across the planet, who have been sent running for the hills, have been begging for government measures to mitigate the impact of the disease as trade collapses and businesses close.
On Tuesday, the US led the charge, with Treasury Secretary Steven Mnuchin saying officials were drawing up a package that could surpass $1 trillion, on top of $300 billion in deferred tax payments, making it among the largest federal emergency plans ever and far surpassing assistance during the 2008 global financial meltdown.
The measures would include cash payments to struggling families, with Mnuchin warning the pandemic could drive US unemployment to 20 percent, a Republican Senate source told CNN.
"We don't want people losing jobs and having no money to live," Donald Trump said at a White House press conference, adding that the package "is a substantial number. We are going big".
Also Tuesday British finance chief Rishi Sunak unveiled an "unprecedented package" of government-backed loans worth £330 billion ($400 billion), while France and Spain announced tens of billions of euros in aid.
And with the global airline industry rocking, Italy moved to re-nationalise the bankrupt former national carrier Alitalia, and France signaled it would not hesitate to take key firms into state control to protect them.
'The missing fundamental'
The moves followed central bank interest rate cuts and pledges to make cash available to stop financial markets from jamming up. US and European equities soared on the news.
However, Asia's morning burst gave way to an afternoon tumble as traders fret about the future as economists predict the US will slip into a recession, with warnings of a six percent contraction during the second quarter.
"While all of these numbers appear impressive on the surface, the uncertain nature of how the virus will play out in the coming weeks means that the final bill could well be much higher, and in that context appears to be acting as an anchor on the extent of any recovery in asset prices," said CMC Markets analyst Michael Hewson.
Tokyo ended down 1.7%, while Sydney plunged more than 6% and Hong Kong lost 1.9% in the afternoon.
Seoul, Mumbai and Taipei all dropped more than 2% and Jakarta gave up more than 1%. Shanghai eased 0.6%.
However, Singapore, Wellington and Bangkok squeezed out gains.
"The missing fundamental ingredient for a sustainable recovery in risk appetite is some evidence that the growth of global COVID-19 infection rates is peaking," said Paul O'Connor, head of multi-asset at Janus Henderson Investors. "Clearly, we are not there yet."
Crude oil also reversed early advances but is flirting with 17-year lows as demand for the commodity falls off a cliff, while Saudi Arabia and Russia embark on a price war that has ramped up output.
AxiCorp's Stephen Innes said the demand outlook remained "dismal", adding: "Indeed, the scale of the economic impact of COVID-19 on the major world economies is unparalleled."
In company news, shares in Fujifilm soared more than 15% after China said a flu drug made by the Japanese firm could be effective in treating patients with the virus.
Key figures around 0620 GMT
Tokyo - Nikkei 225: DOWN 1.7% at 16,726.55 (close)
Hong Kong - Hang Seng: DOWN 1.9% at 23,830.61
Shanghai - Composite: DOWN 0.6% at 2,763.01
Dollar/yen: DOWN at 107.03 yen from 107.64 yen at 2100 GMT
Euro/dollar: UP at $1.1024 from $1.1002
Pound/dollar: UP at $1.2089 from $1.2055
Euro/pound: DOWN at 91.17 pence from 91.19 pence
Brent North Sea crude: DOWN 1.0% at $28.45 per barrel
West Texas Intermediate: DOWN 2.2% at $26.37 per barrel
New York - Dow: UP 5.2% at 21,237.38 (close)
London - FTSE 100: UP 2.8% at 5,294.90 (close)
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