* U.S. Treasury yields make record low of 1.2940%
* E-minis down 1.4%, Euro futures off more than 2%
* Nikkei sinks 2%, leading Asia-wide sharemarket falls
* Oil prices hit one-year low
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, Feb 27 (Reuters) - Stocks sunk deeper into the
red on Thursday, oil prices fell and U.S. Treasuries rallied
into record territory as more signs of the global spread of the
coronavirus heightened fears of a pandemic.
Global markets have dropped for six straight days, wiping
out more than $3.6 trillion in value. Much remains unknown about
the virus that originated in China, but it is clear the
ramifications of the world's second biggest economy in lockdown
for a month or more are vast.
Analysts have sharply downgraded their China and global
growth forecasts, while policymakers from Asia, Europe and the
United States have begun to prepare for a potentially steep
economic downturn than initially anticipated. E-mini futures for the S&P 500 were down 1.4% ESc1 and
Europe appears set for a catch-up slump. EuroSTOXX 50 futures
fell 2.7% STXEc1 and FTSE futures skidded 2.3% FFIc1 .
Oil, sensitive to global growth given the vast energy
consumption in a many countries, fell more than 1% to its
cheapest in over a year. O/R
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.5% and is down more than 4% for the week.
The yield on U.S. Treasuries, which falls when prices rise,
dropped in to uncharted waters underneath 1.3% US10YT=RR . Bets
on monetary easing in the United States have surged. US/
"I think the market is just pushing the Fed to cut rates,"
said Stuart Oakley, Nomura's global head of flow FX in
Singapore.
"It's a flight to quality as well," he said.
"The news seems to be creating this mass hysteria
everywhere, there's panic that the world's about to end, so
people are getting out of risk and putting their money in safe
havens and the biggest one of those are 10-year Treasury bond."
China accounts for about 96% of cases but most new
infections are now being reported elsewhere.
News on Thursday of a jump in cases in South Korea was
accompanied by a warning that the virus may be spreading in
California. Taiwan raised its epidemic response level to the highest
possible. Japan's Nikkei dropped 2% to a four-month low amid
more worries that the Tokyo Olympic Games could be cancelled or
shifted. .T
And on top of that a tour-bus guide in Japan also tested
positive to the virus for a second time, raising questions about
how the pathogen spreads. "This feels like a consolidation, potentially before another
leg down," said Jeffrey Halley, Senior Market Analyst at
brokerage OANDA by phone from Jakarta.
The only bright spot, ironically, was China's stock market,
which climbed in relief that domestically, at least, the
containment efforts are showing signs of working. .SS
NO EQUIVALENT SHOCK
At the same time as the breadth of the virus' spread has
knocked markets, analysts have been steadily revising their
estimates of the economic damage higher.
J.P. Morgan now expects Chinese GDP to shrink 3.9% this
quarter, while Capital Economics sees it contracting this year.
"There is no equivalent exogenous shock the world has gone
through in the post-Bretton Woods period," said Deutsche Bank
analyst Alan Ruskin in a note.
"Work place disruption, trade interlinkages, business
uncertainties, profit warnings, inability to pay, and capacity
to service credit are all related supply-side issues that, in
turn, generate demand effects on employment, disposable income,
wealth and confidence."
Only a dramatic ratcheting higher of bets on interest rate
cuts in the United States has given pause to the huge flow of
money from Asia into greenbacks in the currency markets.
From almost nothing a week ago, markets are pricing a
roughly even chance of a Federal Reserve interest rate cut next
month and have almost fully priced a cut by April. 0#FF:
That was enough to help drag the China-sensitive Aussie
dollar AUD=D3 from an 11-year low and lend support to the euro
EUR= . FRX/
The Aussie last traded at $0.6550 and the euro lifted
through $1.09 for the first time in two weeks to buy $1.0908.
The safe-haven Japanese yen JPY= firmed to 110.02 per
dollar.