The Fed’s lending programme will be expanded to include corporate and municipal debt; purchases of US Treasuries and other government-backed debt will be made unlimited. The rate-setting body earlier said that it would buy at least US$500 billion of Treasury securities and at least US$200 billion of mortgage-backed securities.

Hang on for wild ride as stocks stay volatile amid Covid-19

Senate Democrats blocked legislation for a second consecutive day on an economic stimulus and relief package expected to involve as much as US$2 trillion for companies and individuals.

Democrats insisted on further negotiations, likely pushing a vote towards the end of this week. At issue is whether the bulk of the money should go to workers, as Democrats favour, or whether more should go to companies and banks as supported by Republicans.

Still, Senate Minority Leader Chuck Schumer said on the Senate floor that he was confident that an agreement would be reached soon.

“We’re very close to reaching a deal, very close and our goal is to reach a deal today and we’re hopeful, even confident, that we will meet that goal,” Politico quoted Schumer as saying.

Among high turnover stocks, Tencent fell 3.2 per cent, while Alibaba, the e-commerce giant and parent of the South China Morning Post, plunged 7.1 per cent to HK$170, below its secondary IPO listing price of HK$176 in November. Alibaba is sometimes called a barometer for the Chinese economy.

“Compared with past bear markets, we need to pay very close attention to whether this time will lead to systemic financial crisis,” Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, said of the upheaval. “Market sentiment and new confirmed cases of infection are those indicators. We are not at a bottom yet,” he said.

The current swoon “is quite different compared with 2015 or 9/11,” Wen said. “With no medicine for the virus, monetary policy may only create further worry.”

The Hang Seng has seen wild swings for weeks now. On Friday, it shot up 5.1 per cent in its biggest one-day gain in nearly a decade. That followed four days in which the benchmark lost more than 900 points.

Chiefs of the US and Hong Kong exchanges have said they will not close markets because of the volatility.

The Hang Seng and other Asia benchmarks have mirrored jaw-dropping falls in global markets, as the spreading coronavirus upends businesses, supply chains and normal daily life.

The global death toll has surged to more than 14,500, with hard-hit Italy’s toll rising to nearly 5,500.

Unemployment in the US – which has been seeing record lows – could reach 30 per cent in the second quarter, US Federal Reserve Bank of St Louis President James Bullard predicted, according to a Bloomberg report, with US gross domestic product falling 50 per cent.

US states have started lockdowns of businesses and residents. They are likely to last 10 to 12 weeks – or until early June – US Treasury Secretary Steven Mnuchin told Fox News Sunday. He said he expected that Congress would soon pass the proposed US$1.8 trillion stimulus package, which will act as a “bridge” to help the economy get through the turmoil.

“This isn’t the financial crisis that is going to go on for years,” Mnuchin said.

Seoul’s Kospi closed down 5.3 per cent, and the tech-heavy Kosdaq fell 5.1 per cent.

But Tokyo’s Nikkei 225 was up 2 per cent. Japanese Prime Minister Shinzo Abe told parliament on Monday that he was open to postponing the Olympics if health concerns required it.

The Australian Olympic Committee has also told athletes to prepare for a 12-month postponement of the Tokyo Games. Canada said its athletes would not take part if the Games are held this summer, as scheduled.

The mother of all grizzly bears is mauling global stock markets

Australia’s S&P/ASX200 plummeted 5.6 per cent, while New Zealand’s S&P/NZX50 fell 7.6 per cent, as Prime Minister Jacinda Ardern said the country would go into lockdown.

The Philippine Stock Exchange fell 0.7 per cent.

Last week, the Philippines became the first country to shut its financial markets because of the coronavirus pandemic. Trading was suspended for two days beginning on March 17, as the country deals with strict quarantine measures.

Meanwhile, Singapore’s Straits Times Index plunged 7.3 per cent.

“Investors are recoiling in horror … at the explosive Covid-19 death and latest headcounts around the world,” said Stephen Innes, global markets strategist at AxiCorp, a currency trading platform. “The rapid spread has triggered unprecedented draconian containment measures and sees the world come to a standstill,” Innes said. “All the while Congress is dilly-dallying on an aid plan.”

Innes added that “traders are buckling in preparing for a horrendous peek into their future this week when US initial jobless claims are released. The high-frequency data will undoubtedly confirm we’re entering a vortex of the fastest and most substantial rise in the US and global unemployment in modern financial history,” he said.

Investment bank Credit Suisse said the global market sell-off is not likely to be over, given the evolution of Covid-19, and its economic consequences.

The Swiss bank thinks it is “premature” to move into equities, as markets still are reacting to the pandemic situation, and the effect on underlying fundamental stock values continues to be highly uncertain.

The next two to four weeks will be “crucial”, it said, to know if lockdowns are effective in containing the virus, and how financial markets are reacting to central banks’ stimulus measures so far.

In a note last week, BlackRock said it expected the volatile global markets to settle down once the scale and impact of the coronavirus pandemic were better understood and fiscal and monetary policy response boosted confidence that financial markets were functioning properly.

“We believe market volatility is distracting from the sheer amount of promised [US] stimulus – with more to come,” the note said. “This is why we stay neutral on risk assets and believe investors should take a long-term perspective.”