SYDNEY (Reuters): Stock markets and the dollar were roiled on Monday after the Federal Reserve slashed interest rates in an emergency move and its major peers offered cheap US dollars to ease a ruinous logjam in global lending markets.

The Bank of Japan was holding an emergency meeting of its own to discuss new stimulus measures, though options are limited given rates are already negative.

Japanese Prime Minister Shinzo Abe said G7 leaders would hold a teleconference at 1400 GMT to discuss the crisis.

The drastic manoeuvres were aimed at cushioning the economic impact as the breakneck spread of the coronavirus all but shut down more countries, though they had only limited success in calming panicky investors.

Data out of China also underscored just how much economic damage the disease had already done to the world’s second-largest economy, with official numbers showing the worst drops in activity on record. Industrial output plunged 13.5% and retail sales 20.5%.

“By any historical standard, the scale and scope of these actions was extraordinary,” said Nathan Sheets, chief economist at PGIM Fixed Income, who helps manage $1.3 trillion in assets. “This is dramatic action and truly does represent a bazooka.”

“Even so, markets were expecting extraordinary action, so it remains to be seen whether the announcement will meaningfully shift market sentiment.”

He emphasised investors wanted to see a lot more US fiscal stimulus put to work and evidence the Trump administration was responding vigorously and effectively to the public health challenges posed by the crisis. “The performance of the economy and the markets will be mainly determined by the severity and duration of the virus’ outbreak.”

The jury seemed to be out on that with E-mini futures for the S&P 500 index down 4.77% to their daily trading limit outside the United States.

EUROSTOXXX 50 futures fell 2.8% and FTSE futures 1.7%.

MSCI’s index of Asia-Pacific shares outside Japan slid 3.1% to lows not seen since early 2017, while the Nikkei eased a relatively mild 0.14%.

Shanghai blue chips fell 1.4% even as China’s central bank surprised with a fresh round of liquidity injections into the financial system.

New Zealand’s central bank also shocked by cutting rates 75 basis points to 0.25%, while the Reserve Bank of Australia (RBA) pumped more money into a strained financial system. Markets have been severely strained as bankers, companies and individual investors stampeded into cash and safe-haven assets, while selling profitable positions to raise money to cover losses in savaged equities.

Such is the dislocation the Fed cut interest rates by 100 basis points on Sunday to a target range of 0% to 0.25%, and promised to expand its balance sheet by at least $700 billion in coming weeks.

Five of its peers also joined up to offer cheap US dollar funding for financial institutions facing stress in credit markets.

US President Donald Trump, who has been haranguing the Fed to ease policy, called the move “terrific” and “very good news.” “It may be a shot in the arm for risk assets and help to address liquidity concerns...however, it also raises the question of whether the Fed has anything left in the tank should the spread of the virus not be contained,” said Kerry Craig, global market Strategist at J.P. Morgan Asset Management.

“We really need to see the fiscal side...to prevent a longer than needed economic slowdown.”

The Fed’s rate cut combined with the promise of more bond buying pushed US 10-year Treasury yields down sharply to 0.68%, from 0.95% late on Friday.

That pressured the US dollar at first, though it regained some ground as the Asian session wore on. The dollar was last down 1% on the Japanese yen at 106.82, having fallen 1.7% earlier in the day. The euro was flat at $1.1112.

The commodity-exposed Australian dollar fell 0.2% to $0.6171 while the New Zealand dollar slipped 0.4% to $0.6036.

Oil prices fell on concerns about global demand. Brent crude was last off $1.01 at $32.84 per barrel while US crude slipped 53 cents to $31.20 a barrel.

Gold rallied 1.1% to $1,546.74.

Fed slashes rates, global central banks coordinate to cushion coronavirus blow