SINGAPORE- Asian shares wobbled on Wednesday and bonds held gains, as an emergency rate cut from the US Federal Reserve did little to soothe investor fears over the coronavirus’s widening fallout.
The surprise 50 basis point cut came with commentary highlighting the limits of monetary policy, and Wall Street indexes fell sharply, gold surged and the dollar sank.
The yield on benchmark 10-year US Treasuries, which falls when prices rise, hit a once unimaginable low of 0.9060 percent.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.2 percent higher, after easing hopes drove gains on Tuesday.
Australia’s S&P/ASX 200 index fell 1.2 percent and Japan’s Nikkei was either side of flat in choppy trade.
E-mini futures for the S&P 500 were volatile and last traded 0.8 percent firmer.
The US 10-year Treasury yield drifted below Wednesday’s close to 0.9716 percent and the dollar pared losses after touching a five-month low against the safe-haven Japanese yen.
“We do recognize that a rate cut will not reduce the rate of infection, it won’t fix a broken supply chain; we get that,” Fed Chairman Jerome Powell told reporters at a press conference — sending stocks from 2 percent gains back into the red.
The Dow Jones industrial average, Nasdaq composite and S&P 500 each closed down close to 3 percent.
“Powell’s comments have delivered a reality check for markets, but also highlight the need for fiscal side to do more,” said National Australia Bank FX strategist Rodrigo Catril.
“As the Fed Chair noted, the Fed does not have all the answers.”
More than 3,000 people have been killed by the coronavirus, about 3.4 percent of those infected – far above seasonal flu’s fatality rate of under 1 percent. — Reuters
