Asia shares bounce back, pin hopes on policy stimulus

LONDON: Asian shares bounced and bond yields rose from historic lows on Tuesday as speculation of coordinated stimulus from global central banks and governments calmed panic selling.

Yields on benchmark US 10-year Treasury debt doubled to 0.68% and oil prices rallied more than 6%, offering hope that markets had found a floor, even just fleetingly.

"Talk of coordinated fiscal and monetary support is getting louder," said Rodrigo Catril, a senior FX strategist at National Australia Bank, noting US President Donald Trump was promising "major" steps to support the economy.

Trump plans a news conference later on Tuesday to lay out proposed measures and dealers reported rumours Treasury Secretary Steve Mnuchin was pushing for radical action.

Investors seemed to take heart with E-Mini futures for the S&P 500 rallying 2.4% after an early slide. Eurostoxx 50 futures also rose 1.7%.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4%, having shed more than 5% on Monday. Australia rose 1.9% as some went hunting for bargains in beaten down stocks. Japan's Nikkei eased 0.4%, but was well above early lows.

Wall Street had been on the brink of a bear market with all the major indices down almost 20% from their all-time peak, which amazingly were touched just 13 sessions ago.

Dow fell an eye-watering 7.79%, while the S&P 500 lost 7.60% and the Nasdaq 7.29%.

Energy stocks had led the losses as markets braced for a price war between Saudi Arabia and Russia.

Yet headlines on the coronavirus were still no brighter with Italy ordering everyone across the country not to move around other than for work and emergencies, while banning all public gatherings. "Although uncertainty is very high, we now expect similar restrictions will be put in place across Europe in the coming weeks," warned economists at JPMorgan.

"We are now expecting a rolling 1H20 global growth contraction and a powerful global disinflationary wave to take hold," they added. "We expect the Fed to cut to zero at or before its March 18 meeting."