* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* S&P 500 futures hit limit down, European futures slide
* Asia shares sink on recession fears
* ASX hits fresh seven-year low
* Futures point to Monday Europe and U.S. selldown
By Wayne Cole and Scott Murdoch
SYDNEY/HONG KONG, March 23 (Reuters) - Asian shares sank on
Monday as a rising tide of national lockdowns threatened to
overwhelm policymakers' frantic efforts to cushion what is
likely to be a deep global recession.
"Further deterioration in the COVID-19 outbreak is severely
damaging the global economy," Morgan Stanley analysts warned on
Monday. "We expect global growth to dip close to GFC lows, and
U.S. growth to a 74-year low in 2020."
In a taste of the pain to come, E-Mini futures for the S&P
500 ESc1 dived 5% at the start of the Asian trading session,
and were last off 4.5%. EUROSTOXXX 50 futures STXEc1 plummeted
6.1% and FTSE futures FFIc1 5.6%.
UBS Australian head of equities distribution George Kanaan
said global financial markets were currently gripped by fear,
which seemed unlikely to ease any time soon, despite the
co-ordinated efforts of governments and central banks around the
world.
"I have been in the financial markets for 27 years and I
have never seen anything like this," he told Reuters by
telephone from Sydney.
"This is unprecedented in terms of fears and there are two
elements driving that.
"First is that this involves masses of people. In the GFC,
that was an event that occurred in the investment banks around
the world, it didn't involve people on the street. The second is
that social media is helping to drive this fear and panic."
In Asian trade, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS lost 5.01%, with New Zealand's
market shedding a record 10% .NZ50 as the government closed
all non-essential businesses. Shanghai blue chips .CSI300 dropped 2.51%, though Japan's
Nikkei .N225 rose 2.0% aided by expectations of more
aggressive asset buying by the Bank of Japan. In Australia, the
S&P/ASX200 dropped 5.62% to take the index to a seven-year low.
Globally, analysts are dreading data on weekly U.S. jobless
claims due on Thursday amid forecasts they could balloon by
750,000, and maybe by more than a million. U.S. stocks have already fallen more than 30% from their
mid-February peak and even the safest areas of the bond market
are experiencing liquidity stress as distressed funds are forced
to sell good assets to cover positions gone bad.
In contrast to the response by authorities to the global
health crisis, however, are calls from some on Wall Street to
ease restrictions as soon as possible to give the economy room
to recover.
"Extreme measures to flatten the virus 'curve' is
sensible-for a time-to stretch out the strain on health
infrastructure," former Goldman Sachs Chief Executive Lloyd
Blankfein tweeted. "But crushing the economy, jobs and morale is
also a health issue-and beyond. Within a very few weeks let
those with a lower risk to the disease return to work."
WAITING ON THE DISEASE
E.L.&C. Baillieu financial advisor James Rosenberg said
investors would remain cautious as a growing numbers of cities
around the world entered lockdown.
"The market is going to remain very volatile because nobody
knows how to price a looming shutdown," he said.
"The turning point will be a slowing in the rates of
infection and we are probably weeks away from that happening –
but it will happen with very tough social measures," he said.
The mounting economic toll led to a major rally in sovereign
bonds late last week, with efforts by central banks to restore
liquidity in the market allowing for more two-way trade.
Yields on the benchmark U.S. 10-year note US10YT=RR were
down at 0.80%, having dived all the way to 0.84% on Friday from
a top of 1.28%.
In New Zealand, the central bank announced its first
outright purchase of government paper aiming to inject
much-needed liquidity into the local market. In currency markets, the first instinct on Monday was to
dump those leveraged to global growth and commodity prices,
sending the Australian dollar down 0.8% to $0.5749 AUD=D3 .
The U.S. dollar started firm but took a step back after
partisan battles in the U.S. Senate stopped a coronavirus
response bill from advancing. The dollar eased 0.6% to 110.13 yen JPY= , while the euro
recouped losses to be up 0.3% at $1.0727 EUR= .
Against a basket of currencies the dollar slipped 0.5% to
101.9. =USD
The dollar had been a major gainer last week as investors
fled to the liquidity of the world's reserve currency, while
some funds, companies and countries desperately sought more cash
to cover their dollar borrowings.
The steady rise in the dollar undermined gold, which slipped
0.3% to $1,493.83 per ounce XAU= . GOL/
Oil prices turned mixed after opening sharply lower. Brent
crude LCOc1 futures slipped $1.05 to $26.02 a barrel, while
U.S. crude CLc1 was down 12c to $22.51. O/R
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Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Editing by Sam Holmes & Shri Navaratnam)