Stocks in Australia fell sharply in Monday morning trade as the U.S. Federal Reserve slashed its benchmark interest rate to zero and launched a massive quantitative easing program in an emergency move on Sunday.
The S&P/ASX 200 was down 4.67% in morning trade as the sectors declined, with the heavily weighted financial subindex dropping about 5% as shares of the country's major banks saw steep declines.
Over in Asia, the Nikkei 225 in Japan shed earlier gains as it slipped 1.02% while the Topix index fell 1%. South Korea's Kospi also turned into negative territory as it slipped 0.54%.
Overall, the MSCI Asia ex-Japan index traded 0.51% lower.
Investors are watching for market reaction to the Fed's latest actions. The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0%-0.25% down from a target range of 1% to 1.25%.
Following the Fed decision, U.S. stock futures fell sharply. Stock market futures hit "limit down" levels of 5% lower, a move made by the CME futures exchange to reduce panic in markets. No prices can trade below that threshold, only at higher prices than that down 5% limit.
The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, traded at 106.42 per dollar from lows around 108 seen late last week.
That comes as officials around the world raced to implement measures to combat the economic impact of the ongoing global coronavirus outbreak. For its part, the Fed said "the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States."
Oil prices fell in the morning of Asian trading hours on Monday, with international benchmark Brent crude futures down 2.98% to $32.84 per barrel. U.S. crude futures also slipped 1.73% to $31.18 per barrel.
On the economic data front, Chinese industrial production data for January and February is expected to be out around 10:00 a.m. HK/SIN and is likely to give a clearer picture of the impact of the coronavirus' impact on the country's economy. The disease was first reported in the country and prompted its government to take drastic measures such as an extended Lunar New Year holiday to curb the virus' spread.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98 after rising from levels below 96 last week.
The Australian dollar changed hands at $0.6188 after slipping from levels above $0.64 last week.
Here's a look at what's on tap in the trading day ahead:
- China: Industrial production data for January and February at 10:00 a.m. HK/SIN
— CNBC's Fred Imbert and Steve Liesman contributed to this report.
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March 16, 2020 at 07:30AM
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Australia stocks fall more than 4% as Asia stocks shed gains; Fed cuts rates to zero - CNBC
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