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Wall Street’s worst night since 1987 looks set to drive the ASX 200 below 5000 for the first time in four years.

Index futures point to an opening loss of 382 points or 7.2 per cent here following a night of historic carnage on financial markets. The dollar plunged to its lowest level since 2009.

Within minutes of opening, US stocks hit a 7 per cent down-limit, triggering a 15-minute trading halt for the second time this week. The announcement of a Federal Reserve funding operation mid-session only stemmed the selling briefly. When the night ended, the S&P 500 had fallen 261 points or 9.51 per cent, joining the Dow and Nasdaq in a bear market. The Dow shed 2,353 points or 9.99 per cent during its worst drop since the 1987 Black Monday crash. The Nasdaq gave up 750 points or 9.43 per cent.

Australian stocks dived yesterday in anticipation of a bad night overseas after President Donald Trump suspended travel from Europe but offered frustrated traders few signs his administration can shield the US from the economic havoc sown by the coronavirus. The ASX 200 slumped 421 points or 7.4 per cent, extending its dramatic decline from last month’s peak to 26.3 per cent. But not even Australia’s largest fall since the GFC was enough to pre-empt what followed.

European stocks crashed 11.5 per cent. In the US, cruise lines, airlines and energy companies plunged up to 47 per cent as traders abandoned stocks exposed to the travel ban. The Dow Jones Transportation Average shed 10.7 per cent. Dow component Boeing briefly lost more than a quarter of its value. The Russell 2000 index of small caps fell 11.2 per cent. Wall Street’s “fear gauge”, the VIX, jumped to its highest level since 2008.

“We are going into a global recession,” Mohamed El-Erian, chief economic adviser at Allianz, told CNBC. “After what’s been happening the last few days, we are going to see a spread of economic sudden stops.”

With the White House looking impotent, the Federal Reserve deployed another tool in its arsenal, announcing it will ramp up asset purchases for a month and inject liquidity into the market. The moves came as government bond yields hit historic lows amid reports of liquidity issues.

“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the New York Fed said.

Stocks jumped on the news, but quickly fell back to their lows. The Fed is due to hold a scheduled meeting next week and is widely expected to cut its key rate again, following a 50 basis points emergency cut last week.

Sector analysis shows no hiding places. While energy, financials and industrials all recorded double-digit declines, the defensive health and real estate sectors lost 7.4 per cent and 8.7 per cent, respectively. Gold dropped $52 or 3.2 per cent, settling at US$1,590.30 an ounce amid reports of traders “selling what they can” to cover losses elsewhere. The precious metal was lately lower still at US$1,569.10.

A jittery oil market tumbled as Trump’s travel ban delivered another blow to demand. Brent crude settled $2.57 or 7.2 per cent lower at US$33.22 a barrel.

Australia’s largest miners logged double-digit losses in overseas trade. BHP’s US-listed stock plunged 12.75 per cent and its UK-listed stock 16.48 per cent. Rio Tinto shed 9.05 per cent in the US and 11.78 per cent in the UK. Iron ore continued to ride out the storm, the spot price landed in China rising 75 cents or 0.8 per cent to US$90.10 a dry ton.

Copper sagged to a three-year low during a grim night on the London Metal Exchange. Benchmark copper failed to trade in closing rings, but was bid down 2.4 per cent to US$5,395 a tonne after earlier trading as low as US$5,381.50. Aluminium shed 1.1 per cent. Nickel was bid down 4.2 per cent, lead 1.2 per cent, zinc 2.4 per cent and tin 3 per cent.

The dollar was last down 2.7 per cent at 63.09 US cents, a level last seen during the washout from the financial crisis .

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