GLOBAL MARKETS-Stocks reel as Fed leads global rescue effort for markets

* Fed cuts rates to 0-0.25% in emergency move
* Major central banks offer U.S. dollar funding to break
logjam
* Dollar pares losses, up on emerging/commodity currencies
* S&P 500 futures limit down, oil prices slip
* Asian stock markets : https://tmsnrt.rs/2zpUAr4

By Wayne Cole
SYDNEY, March 16 (Reuters) - Stock markets and the dollar
were roiled on Monday after the Federal Reserve slashed interest
rates in an emergency move and its major peers offered cheap
U.S. dollars to break a logjam in global lending markets.
The aggressive policy steps were aimed at cushioning the
economic impact as the breakneck spread of the coronavirus all
but shut down more countries, but had only limited success in
calming panicky investors.
Data out of China also underscored just how much economic
damage the disease had already done with industrial output
plunging 13.5% and retail sales 20.5%. "By any historical standard, the scale and scope of these
actions was extraordinary," said Nathan Sheets, chief economist
at PGIM Fixed Income, who helps manage $1.3 trillion in assets.
"This is dramatic action and truly does represent a bazooka."
"Even so, markets were expecting extraordinary action, so it
remains to be seen whether the announcement will meaningfully
shift market sentiment."
He emphasised investors wanted to see a lot more U.S. fiscal
stimulus put to work and evidence the Trump administration was
responding vigorously and effectively to the public health
challenges posed by the crisis.
"The performance of the economy and the markets will be
mainly determined by the severity and duration of the virus'
outbreak."
The jury seemed to be out on that with E-mini futures for
the S&P 500 index ESc1 down 4.77% to their daily trading limit
outside the United States.
MSCI's index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS slid 2.4% to lows not seen since early 2017,
while the Nikkei .N225 eased 0.4%.
Shanghai blue chips .CSI300 fell 1.5% even as China's
central bank surprised with a fresh round of liquidity
injections into the financial system.
New Zealand's central bank also shocked by cutting rates 75
basis points to 0.25%, while the Reserve Bank of Australia (RBA)
pumped more money into a strained financial system. STRAIN
Markets have been severely strained as bankers, companies
and individual investors stampeded into cash and safe-haven
assets, while selling profitable positions to raise money to
cover losses in savaged equities. Such is the dislocation the Fed cut interest rates by 100
basis points on Sunday to a target range of 0% to 0.25%, and
promised to expand its balance sheet by at least $700 billion in
coming weeks. Five of its peers also joined up to offer cheap U.S. dollar
funding for financial institutions facing stress in credit
markets. U.S. President Donald Trump, who has been haranguing the Fed
to ease policy, called the move "terrific" and "very good news."
"It may be a shot in the arm for risk assets and help to
address liquidity concerns...however, it also raises the
question of whether the Fed has anything left in the tank should
the spread of the virus not be contained," said Kerry Craig,
global market Strategist at J.P. Morgan Asset Management.
"We really need to see the fiscal side...to prevent a longer
than needed economic slowdown."
The Fed's rate cut combined with the promise of more bond
buying pushed U.S. 10-year Treasury yields down sharply to 0.66%
US10YT=RR , from 0.95% late on Friday.
That pressured the U.S. dollar at first, though it regained
some ground as the Asian session wore on. The dollar was last
down 0.5% on the Japanese yen at 107.36, having fallen 1.7%
earlier in the day JPY= . The euro was flat at $1.1104 EUR= .
The risk-sensitive Australian dollar fell 0.6% to $0.6132
AUD=D3 while the New Zealand dollar NZD=D3 slipped 0.4% to
$0.6036.
Oil prices fell on concerns about global demand. Brent crude
LCOc1 was last off $1.01 at $32.84 per barrel while U.S. crude
slipped 60 cents to $31.13 a barrel. O/R
Gold was up 0.2% at $1,532.99 XAU= rose.

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