GLOBAL MARKETS-Stocks crumble, unconvinced as Fed and peers attempt radical rescue

* 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 ease a ruinous logjam in global lending markets.
The Bank of Japan was holding an emergency meeting of its
own to discuss new stimulus measures, though options are limited
given rates are already negative.
Japanese Prime Minister Shinzo Abe said G7 leaders would
hold a teleconference at 1400 GMT to discuss the crisis.
The drastic manoeuvres were aimed at cushioning the economic
impact as the breakneck spread of the coronavirus all but shut
down more countries, though they had only limited success in
calming panicky investors.
Data out of China also underscored just how much economic
damage the disease had already done to the world's
second-largest economy, with official numbers showing the worst
drops in activity on record. Industrial output plunged 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. .N
EUROSTOXXX 50 futures STXEc1 fell 2.8% and FTSE futures
FFIc1 1.7%.
MSCI's index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS slid 3.1% to lows not seen since early 2017,
while the Nikkei .N225 eased a relatively mild 0.14%.
Shanghai blue chips .CSI300 fell 1.4% 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 0.68%
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 1% on the Japanese yen at 106.82, having fallen 1.7%
earlier in the day JPY= . The euro was flat at $1.1112 EUR= .
The commodity-exposed Australian dollar fell 0.2% to $0.6171
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 53 cents to $31.20 a barrel. O/R
Gold rallied 1.1% to $1,546.74 XAU= .

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