Asian shares and US stock futures fell on Friday following another Wall Street rout as disruptions to global business from the coronavirus beyond China worsened, stoking fears of a prolonged world economic slowdown.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.3 per cent. Australian shares were down 1.64 per cent, while Japan's Nikkei stock index slid 2.29 per cent.
Yields on 10-year US Treasuries fell to a record low and two-year yields fell to the lowest in more than three years as investors increased bets that the Federal Reserve will follow this week's surprise 50 basis point rate cut with further easing to prevent corporate bond spreads from widening further.
Tumbling yields hammered the dollar, which traded near a six-month low versus the yen and close to a two-year trough against the Swiss franc.
Oil prices fell due to worries that non-OPEC oil producers might not agree to output cuts even though global energy demand is weakening.
The spread of a new coronavirus has accelerated so much in Europe, Britain and North America that investors who once played down the virus are now re-assessing the risks, which means more volatility in financial markets.
"Optimism overseas is fading and now people are really starting to question just how bad things will get," said Takuya Kanda, general manager of research at Gaitame.com Research Institute in Tokyo.
"For some investors, Treasuries are the only place to park their money, but for others buying the dollar or stocks is out of the question."
US stock futures erased early gains to trade down 0.12 per cent in Asia on Friday.
The S&P 500 tumbled 3.39 per cent on Thursday. The benchmark S&P 500 ended down more than 10 per cent from its February 19 closing high, after last week logging its biggest weekly percentage decline since October 2008.
Officials and companies in Britain, France, Italy, and the United States are struggling to deal with a steady rise in coronavirus infections that have in some cases triggered corporate defaults, office evacuations, and panic buying of daily necessities.
The flu-like virus emerged late last year in the central Chinese city of Wuhan and has since spread to more than 80 countries and has claimed more than 3,000 lives. New infections have slowed in China, but there are concerns other countries are not prepared.
Shares in China fell 0.96 per cent, while stocks in Hong Kong, another city hard hit by the virus, fell 1.89 per cent.
Travel restrictions and factory closings aimed at curbing the spread of the virus are expected to put downward pressure on global economic growth.
Many investors await the release of US non-farm payrolls later on Friday. Recent US economic data has been encouraging, but concerns about the epidemic are likely to overshadow any signs of a strong labour market.
The Federal Reserve and Bank of Canada both responded to the economic threats by cutting interest rates by 50 basis points this week.
The yield on benchmark 10-year Treasury notes fell to a record low of 0.8980 per cent in Asia Friday. The two-year yield fell to 0.5420 per cent, the lowest since July 2016.
Minneapolis Federal Reserve president Neel Kashkari said late on Thursday the Fed could cut rates further if the impact of the coronavirus is worse than expected.
Money markets were pricing in another 25 basis-point-cut from the current 1.0 per cent to 1.25 per cent range at the next Fed meeting on March 18-19 and a 50-basis-point cut by April.
Against the Japanese yen, the dollar fell to a six-month low and was last at 106.03 yen. The greenback also sank to a two-year trough of 0.9447 Swiss franc.
Sterling traded near a one-week high versus the dollar.
The euro held steady at $1.1225. Markets in the euro zone are pricing in a 93 per cent chance that the European Central Bank will cut its deposit rate, now minus 0.50 per cent, by 10 basis points next week.
US crude fell 0.37 per cent to $45.73 a barrel. Brent crude fell 0.32 per cent to $49.83 per barrel. Worries about a decline in global demand caused by the coronavirus outbreak and uncertainty about production cuts hurt crude prices.
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