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US Treasury yields nevertheless rose off record lows hit the previous day as equity futures turned around to signal a firmer Wall Street open following Tuesday's 3%-plus slide on news the coronavirus had spread to dozens of countries.
Adding to alarm, the World Health Organisation said the epidemic had peaked in China, but urged other countries to prepare for virus outbreaks.
"China's template to contain the virus was to restrict economic activity and that's hitting home," Lombard Odier's chief strategist Salman Ahmed said.
"Markets are fearing there will be sequential shutdowns of economic systems to stop the spread."
Those fears of severe economic damage, even a recession, have sent MSCI's All-Country equity index to 2.5-month lows, wiping almost $3 trillion off its value this week alone.
Asian shares excluding Japan fell 1%. Tokyo lost 0.8% on concerns the virus could force the cancellation of the Olympics scheduled for July. That weighed on shares in firms such as Dentsu that are involved in the games.
A pan-European equity index lost 1%, shrugging off slight gains on futures for the S&P 500, Dow Jones and Nasdaq.
Economic growth worries are reflected in a steep drop in bond yields - 10-year US yields are down 60 basis points since the start of 2020. Moreover, US three-month T-bill yields remained some 18 basis points above 10-year rates - the curve inversion that's considered a classic signal of recession.
Analysts note growing market bets on interest rate cuts - expectations that monetary policy will be deployed yet again to head off any downturn.
Money markets are now pricing in roughly two 25-basis-point rate cuts by the US Federal Reserve and expect a 10bps cut by the European Central Bank by December.
A Bank of England rate cut is also fully priced for September.
"Part of this selloff is a cry for help," Ahmed said, adding that Fed cuts were unlikely in the early part of the year unless "we get an Italy-like situation in the United States".
An outbreak of coronavirus in northern Italy has raised additional fears for its perpetually sluggish economy.
The dash for safety also boosted gold 0.5% to around $1,640 per ounce, heading back towards seven-year highs of 1,688.66 hit on Monday.
Oil prices fell, with US futures at the lowest since January 2019, below $50 per barrel.
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