Asian shares steadied from early losses on Monday as investors placed their hopes on a coordinated global monetary policy response to weather the damaging economic impact of the coronavirus epidemic.
Pandemic fears pushed markets off a precipice last week, wiping more than $5 trillion from global share value as stocks cratered to their steepest slump in more than a decade.
The sheer scale of losses prompted financial markets to price in policy responses from the U.S. Federal Reserve to the Bank of Japan and the Reserve Bank of Australia.
Futures now imply a full 50 basis point cut by the Fed in March while Australian marketsare pricing in a quarter-point cut at the RBA’s Tuesday meeting.
Also helping calm market nerves, Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank would take necessary steps to stabilise financial markets.
In equities, Chinese shares opened higher with the blue-chip index up 1.5%.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4%, turning around from a loss of about 0.3% earlier in the day.
E-minis for the S&P500, which were down more than 1% at one point, were last up 0.3% while Japan’s Nikkei, which opened 1.3% lower at a six month trough, climbed 0.4%.
Australia’s S&P ASX/200, which had tumbled 3%, was last off 1.8%.
Benchmark U.S. 10-Year Treasuries hit a fresh record low of 1.0750%.
Despite some stability in the market, analysts still expect volatility to persist.
Leaders in Europe, the Middle East and the Americas rolled out bans on big gatherings and stricter travel restrictions over the weekend as cases of the new coronavirus spread.
The epidemic, which began in China, has killed almost 3,000 people worldwide as authorities race to contain infections in Iran, Italy, South Korea and the United States.