Coronavirus has continued to wreak havoc on the global share market, with Australian stocks dropping more than one per cent at open today.
Over in the US, the Federal Reserve slashed interest rates by half a percentage point in a last-chance bid to ease the effects of the coronavirus outbreak - it was the Bank’s first emergency rate cut since the 2008 global financial crisis.
"The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity," it said in a statement.
Also read: Where to invest during a pandemic
The rate cuts were intended to ease investors’ worries, but Wall Street took a tumble regardless: all three major US stock market indexes closed nearly 3 per cent lower after the cut.
"The rate cut underscores the magnitude of the problem that the global economy is facing," Peter Kenny, New York markets commentator said.
"Normally, markets would welcome a rate cut, and they were hoping for it. Now that we've got it, the question is, what's next?"
Reserve Bank of Australia slashes rates
Governor Philip Lowe said the rate decision was fuelled by the coronavirus outbreak.
“The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors,” Lowe said.
“The uncertainty that it is creating is also likely to affect domestic spending. As a result, GDP growth in the March quarter is likely to be noticeably weaker than earlier expected.”
Despite a rate cut, Australian stocks still dipped at open.
The S&P/ASX200 index was down 1.24 per cent at 10.15am, reversing the gains from Tuesday when 0.69 per cent.
The broader All Ordinaries index dropped 1.26 per cent as all indices fell except materials.
Fidelity International's head of global macro, Anna Stupnytska, said while the cuts are a start, the RBA can’t save the economy on its own.
“While easier monetary policy helps sentiment, central banks should not be acting in isolation - the governments should step in with fiscal measures that are timely and well designed, supporting the economies that struggle not just from the virus itself but also from preventative measures that - in some cases - have ground activity to a halt,” Stupnytska said.
GDP figures are expected to be released at 11am today.
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