SINGAPORE -- Asian shares were poised to drop on Wednesday and bonds soared, after an emergency rate cut from the US 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 US Treasuries, which falls when prices rise, hit a once unimaginable low of 0.9060 percent.
In Asia, Australia's S&P/ASX 200 index fell 1.4 percent in early trade. Nikkei futures traded in negative territory and e-mini futures for the S&P 500 fell 0.4 percent. Trade in Treasury futures implied a yield of 0.86 percent on US 10-year paper .
The dollar hit a 5-month low against the safe-haven Japanese yen.
"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 percent of those infected - far above seasonal flu's fatality rate of under 1 percent.
It continues to spread quickly beyond the outbreak's epicenter 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.
US markets had initially jumped more than 2 percent 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, Nasdaq composite and S&P 500 each closed down close to 3 percent.
"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 US dollar fell across the board, sending it to an eight-week low against a basket of currencies , while pushing the euro to an eight-week peak.
In Asian morning trade, the yen was the biggest mover, rising 0.2 percent to 106.84 per dollar, its highest since October.
Oil prices slipped, with Brent crude falling 30 cents to $51.90 per barrel and US crude down 26 cents at $47.18 a barrel. Gold rose 0.5 percent to $1647.60 an ounce.