World share markets and oil prices struggled to shake off their coronavirus fears on Tuesday after Wall Street's worst rout since the Black Monday crash of 1987.
After Monday's meltdown, it was another day to test the nerves. Asia's traders saw the Philippines become the first country to close its markets. Europe's watched an early rebound get wiped out as the region's battered airline and travel stocks suffered another 7 per cent drubbing.
Data showed German investor morale at lows last seen in the 2008 financial crisis, and rating agency S&P Global warned the inevitable global recession this year would lead to a spike in defaults.
All was not lost, though. Wall Street's main markets all opened more than 2 per cent higher, helped by plans for more U.S. fiscal stimulus and the dollar recouped some lost ground against the safe-haven Japanese yen.
Oil also held up after Brent's slump below $30 a barrel had added to Monday's carnage.
"I think everyone understands that monetary and fiscal finance doesn't stop the virus but it can at least alleviate some of the pressure," said Schroders senior European economist and strategist Azad Zangana.
"The markets are now looking very cheap ... but the big issue is momentum in the market and confidence more generally."
With so much uncertainly still, he added, "it is just a question of waiting it out."
Financial markets nosedived on Monday, with the S&P 500 tumbling 12 per cent and a fresh blizzard of emergency central bank rate cuts globally only seemed to add to investor panic.
Tuesday's stabilisation saw Australian shares close 5.9 per cent higher, their biggest daily percentage gain since October 2008, after plunging nearly 10 per cent on Monday.
MSCI's broadest index of Asia-Pacific shares and Japan's Nikkei both finished steady. South Korea finished down 2.4 per cent, however, and there was the landmark as the Philippines became the first country to suspend all trading over the virus.
Some $2.7 trillion in market value was wiped from the S&P 500 on Monday as it suffered its third-largest daily percentage decline on record. Over the past 18 days, the benchmark index has lost $8.3 trillion. World stocks have haemorrhaged over $15 trillion.
Futures trade still pointed to a positive open in U.S. markets. The S&P 500 e-minis were up 1.2 per cent, although earlier they had been up as much as 4 per cent.
"The move in U.S. stock futures prompted some buying of battered down shares and lifted dollar/yen," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
"The focus is shifting to the fiscal response to the virus. We're locked in a pattern where markets bounce and then resume falling."
Waiting For Help
Gold, which is normally bought as a safe haven, saw another 3 per cent slide as some investors chose to sell whatever they could to keep their money in cash.
The U.S. Federal Reserve stunned investors with another emergency rate cut on Sunday, prompting other central banks to ease policy in the biggest coordinated response since the global financial crisis more than a decade ago.
Investors, however, are worried that many have used up their ammunition and more draconian restrictions on personal movement are necessary to contain the global coronavirus outbreak.
Group of Seven finance ministers are expected to hold a call on Tuesday night, though markets want to see signs that the virus will not snowball out of control as well as fiscal stimulus.
"I think the priorities of the governments around the world will probably move away from economic growth towards containing the virus," said Jim McCafferty, Nomura's joint head of APAC equity research.
"Safety of national citizens might become a bigger priority. But with that they want to keep the economies in a working situation."
Traders are also looking to data due later, after the slump in German investor sentiment.
The United States will release retail sales and industrial production figures for February, but they are unlikely to reflect the impact of the coronavirus just yet.
"The sudden economic stop caused by COVID-19 containment measures will lead to a global recession this year," S&P Global said.
In the currency market, the dollar rose 1 per cent to 107 yen, after a 2 per cent decline the day before, when the Fed's rate cut rippled through financial markets.
It also meant the euro dropped 1.6 per cent to $1.10 and was headed for its biggest one-day loss since June 2018, and the Australian dollar, seen as sensitive to global growth due to the country's commodities exports, fell to $0.5992, its weakest since 2003. The Aussie is now down 8 per cent so far in March.
Germany's benchmark 10-year Bund yield rose to a one-month high in bond markets on growing expectations of a government spending blast.
Long-dated German bond yields have jumped 50 basis points from record lows hit just over a week ago. Borrowing costs in France and Spain, where worries are back about their debt levels, have hit their highest since last May.