MORNING BID-Governments aim their bazookas

A look at the day ahead from senior markets correspondent Saikat Chatterjee. The views expressed are his own.

Bazooka time! After coming under fire for being slow to respond to what is an effectively a simultaneous demand and supply shock to the global economy, governments across the world are rushing to roll out massive stimulus, adding to the monetary firepower their central banks have already deployed.

The White House is seeking approval for a $1 trillion package that includes direct payments to households. Britain will offer a 330 billion-pound lifeline of loan guarantees and provide a further 20 billion pounds in tax cuts, grants and other help for businesses.

As Spain and France rushed to introduce their own funding packages -- the former announced an aid package equivalent to 20% of its GDP -- Bloomberg reported Angela Merkel as saying Germany may consider a joint EU funding programme to mitigate the fiscal consequences of the situation, a revolutionary development.

But the relief in markets was short-lived, as reality set in. The United States is just starting its coronavirus battle and its economy is set for a painful few quarters. Oxford Economics now predicts U.S. growth at zero in 2020 (1.7% pre-virus) with output contracting 12% in the second quarter. More broadly, S&P Global forecasts a global recession, with 2020 growth at just 1.0% to 1.5% -- equivalent to recession for most of the developing world.

As countries continued to limit travel in a bid to contain the spreading virus, Japan offered a window into what a disruption in the global supply chain looked like. Its imports from China fell at their fastest pace in three decades in February as the coronavirus ground factory production. Imports fell 14%, dragged by an jaw-dropping 47% tumble in goods from China, the biggest such drop since August 1986, as the world’s second biggest economy went into lockdown. Expect more when March data emerges.

And despite billions of dollars of liquidity and multiple rounds of rate cuts, liquidity stress is everywhere. Asset managers Kames Capital and Janus Henderson suspended dealings in their UK real estate funds while money markets continued to exhibit signs of stress. Tuesday's 16.25-basis-point single-day spike in three-month dollar LIBOR, (its biggest since the 2008 crisis), widening spreads on FX basis swaps, and strong participation in the ECB’s initial LTRO bridge financing programme indicated a broad rush for funding.

Money market pain is even more remarkable given the Fed kicked off its CPPF facility to ease strains in the commercial paper market. Essentially, that means it's taking over the role of money market mutual funds.

European stocks are down 3%. Stocks markets in Asia finished in the red. Gold, usually considered a safe haven, extended its fall. Gold's losses aren't unprecedented -- during the financial crisis in 2008, it fell in the initial stages as positions were liquidated to meet margin calls.

Car sales are already falling sharply in Europe's major markets. Volkswagen is the latest to announce drastic measures, halting production of commercial vehicles at its plants in Poznan, Swarzedz and Września in Poland. Retail is facing devastating consequences; H&M temporarily closed all its 460 stores in Germany, its number-one market for sales, and all 590 in the United States, its second-largest market. The world’s 116 listed airlines have lost 41% of their share value. Emerging-market currencies were once again in the firing line, with the MSCI index down 3.5%. Turkey's lira was 0.8% lower and South Africa's rand 0.6% down before some economic data. In Asia, the only significant gainer was the offshore Philippine peso, which added nearly 1.3%, marking its biggest intraday percentage gain since May 2016, after its foreign exchange and bond markets reopened. South Korea's won added 0.3% after the government pledged to relax a key foreign exchange regulation to encourage banks to supply more dollars in local markets.

(Additional reporting by Sujata Rao; editing by Larry King)