* Fed cut fails to halt slide; S&P 500 drops 2.8%
* Australia down 1.4% in early trade, Nikkei futures
negative
* Yen hits 5-month high vs dollar
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, March 4 (Reuters) - Asian shares were poised to
drop on Wednesday and bonds soared, after an emergency rate cut
from the U.S. Federal Reserve was unable to quell investor fears
over the coronavirus's widening fallout.
Wall Street indexes fell sharply overnight, gold surged and
the dollar sank after the Fed's surprise cut of the federal
funds rate by a half percentage point. The yield on benchmark 10-year U.S. Treasuries, which falls
when prices rise, hit a once unimaginable low of 0.9060%. US/
In Asia, Australia's S&P/ASX 200 index .AXJO fell 1.4% in
early trade. Nikkei futures NKc1 traded in negative territory
and e-mini futures for the S&P 500 ESc1 fell 0.4%. Trade in
Treasury futures implied a yield of 0.86% on U.S. 10-year paper
TYc1 .
The dollar hit a five-month low against the safe-haven
Japanese yen JPY= . FRX/
"The market reaction to the Fed's decisive action is
worrying for investors," said Michael McCarthy, chief market
strategist at brokerage CMC Markets in Sydney.
"There is now a question over the ability of monetary policy
to halt plummeting asset prices. The seeming ineffectiveness of
further monetary easing will almost certainly lead to further
calls on governments to push the fiscal stimulus button."
More than 3,000 people have been killed by the coronavirus,
about 3.4% of those infected - far above seasonal flu's fatality
rate of under 1%.
It continues to spread quickly beyond the outbreak's
epicentre in China, with Italy overnight reporting a jump in
deaths to a total of 79. The Fed's easing underscored the bank's concern, coming two
weeks ahead of a scheduled policy meeting, where traders had
already priced in a 50 basis point cut.
But it has failed to put an immediate floor under stock
prices.
U.S. markets had initially jumped more than 2% but then
dropped as traders worried whether pumping more money into the
system would address the central problem - a drop in business
activity as workers and consumers stay home.
The Dow Jones industrial average .DJI , Nasdaq composite
.IXIC and S&P 500 .SPX each closed down close to 3%.
"The question here is whether a conventional interest rate
response is sufficient, or whether it requires also a fiscal
response," said Sameer Goel, chief strategist, Asia macro, at
Deutsche Bank in Singapore.
"It's not an economic shock, it's a shock driven by a
non-economic factor. It's still not clear how big the problem
ultimately is, or could be, and until you know that, it's hard
to know how much medicine to apply to it."
In currencies, the U.S. dollar fell across the board,
sending it to an eight-week low against a basket of currencies
=USD , while pushing the euro EUR= to an eight-week peak.
In Asian morning trade, the yen was the biggest mover,
rising 0.2% to 106.84 per dollar, its highest since October.
Oil prices slipped, with Brent crude falling 30 cents to
$51.90 per barrel LCOc1 and U.S. crude down 26 cents at $47.18
a barrel CLc1 . Gold rose 0.5% to $1647.60 an ounce XAU= .
(Editing by Sam Holmes)