Asia stocks dive, dollar soars as ECB bazooka fails to ease fears

ECB's Pandemic Emergency Purchase Programme aims to give financial markets much-needed liquidity

HONG KONG: Asian equities sank again Thursday while the dollar surged as a European Central Bank plan to spend more than $800 billion to buy bonds failed to instil optimism in traders who fear that the world is heading for a virus-fuelled economic catastrophe.

In what one analyst said could be a "game changer" for the coronavirus-wracked eurozone, the ECB's so-called Pandemic Emergency Purchase Programme aims to give financial markets some much-needed liquidity as investors pull the plug on markets.

It said the €750 billion ($820-billion) programme was temporary and will be halted when the coronavirus crisis is judged to be over "but in any case not before the end of the year".

After announcing the move, ECB boss Christine Lagarde tweeted that "extraordinary times require extraordinary action. There are no limits to our commitment to the euro."

Those comments echoed the words of her predecessor Mario Draghi, whose pledge to do "whatever it takes" to preserve the eurozone was seen as a turning point in the region's sovereign debt crisis.

Asian markets initially climbed on the news but soon tumbled as investors contemplate months of economic hardship with countries around the world in lockdown to prevent the spread of COVID-19, which has now infected more than 200,000 people and killed almost 9,000.

Seoul tanked more than 8%, Singapore dived 3.9% and Sydney and Wellington lost more than 3%. Tokyo and Shanghai ended down 1%, while Hong Kong was 2.6% off.

Taipei and Jakarta crumbled more than 5%, Mumbai lost 2.3% and Bangkok was 1.5% lower.

Manila plunged almost 25% after reopening following a two-day suspension prompted by the outbreak but it later bounced back to sit more than 13% down.

In early trade, London edged up 0.3%, Paris jumped more than 2% and Frankfurt gained 0.4%.

The sharp losses were in tandem with a surge in the dollar as investors scrambled for cash to pay debts or just stash away.

AxiCorp's Stephen Innes warned of further turmoil despite the historic moves by banks and governments.

"Wartime economics is not going to help with everyone in lockdown sitting at home watching Netflix," he said.

The ECB's bazooka was the latest in a string of measures by central banks and governments aimed at supporting the global economy, which have amounted to almost $2 trillion.

Still, the measures have not been enough to soothe panic-stricken investors and analysts say more must be done.