Asian shares and Wall Street futures fell on Wednesday as growing scepticism about Washington’s stimulus package to fight the coronavirus outbreak knocked the steam out of an earlier rally.
Markets had been recovering from a brutal global selloff on Monday that was triggered by the double shock of an oil price crash and the worsening outbreak.
Those gains looked short-lived in early Asian trade, with U.S. stock futures falling 2.2% and MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.29%. Australian shares were down 2.02%, while Japan’s Nikkei stock index slid 1.28%.
Earlier this week, U.S. President Donald Trump said he would take “major steps” to ease economic strains caused by the spread of the flu-like virus. Headlines focused on discussions of payroll tax cut, which helped lift market sentiment.
However, the lack of major announcements since then has left some investors unimpressed.
On Wall Street, all three major indexes jumped nearly 5% on Tuesday, one day after U.S. equities markets suffered their biggest one-day losses since the 2008 financial crisis.
The dollar gave up gains and fell against the yen, the Swiss franc and the euro as uncertainty set in.
Benchmark U.S. 10-year Treasury yields were last at 0.7068%, more than double Monday’s record low yield of 0.3180%.
Further gains in yields could be limited because there are still strong expectations that the U.S. Federal Reserve and other central banks will support fiscal stimulus with monetary easing.
On Monday the oil market collapsed and futures saw their largest percentage drop since 1991 Gulf War as a price war between Saudi Arabia and Russia broke out.
Spot gold, which is often bought as a safe-haven during times of uncertainty, rose 0.5% in Asia to $1,658.50 per ounce.
The virus emerged late last year in the central Chinese province of Hubei but has since spread rapidly outside of China, leading to more than 4,000 deaths.