MORNING BID-Seeking a bazooka to tame the bears

A look at the day ahead from EMEA deputy markets editor Sujata Rao. The views expressed are her own.

What more can policymakers do to stem the rot? Well, they could try not to make things worse. Trump did exactly that yesterday. Measures such as payroll tax cuts and paid sick leave for gig workers had been mooted, but the U.S. president instead announced a travel ban to and from Europe, which, if anything, will only hit travel, trade and airlines even more. It also took markets another leg down, meaning world markets have had $5 trillion wiped off their value already this week. Trump also tipped the S&P500 into bear territory - a 20% drop off recent peaks. Who would have thought it a month back?

So far, we've also had emergency 50 basis-point rate CUTRS from the Fed and BOE, fiscal easing packages from Japan, UK and the United States and growing chances that even Germany will bite the bullet. Even those have not done the trick. So today Wall Street looks set for another big plunge with futures down 4% and European shares opening a whopping 5% lower. Travel and leisure share were down 9% to six-year lows; airlines are opening 10-15% lower.

Earlier in Asia the Nikkei tumbled 4%, mainland Chinese index a lesser 1.5%. World stocks are down 1%.

In a sign of the stresses on companies, Boeing slumped 18% after announcing a full drawdown of an existing loan facility. The fear is more and more companies will draw on their credit lines at the same time, with the risk reverberating through FX swaps markets. Insurers are likely to come under the cosh again, with events being cancelled left, right, and centre, including soccer matches, US NBA fixtures and even the New York St Patrick's day celebrations – the first time since 1762 apparently.

Appalling economic data is rolling out thick and fast, albeit with a lag -- for instance Chinese Feb auto sales plunged 79% in their biggest monthly drop ever.

Speaking of disappointment, there's not that much faith in the ECB’s ability to pacify markets even though it will probably cut rates and expand asset purchases at its meeting today. It does need to act to ease borrowing costs for companies as well as for weaker southern European states. Recent days in fact have seen French spreads widening too, meaning the pain is starting to spread to the euro zone's "core" states.

Is this Lagarde's "do-what-it-takes" moment? Sadly, Draghi didn't leave her much by way of ammunition, so let's see what she can pull out the bag. What is certain is that she will certainly call on Germany to loosen the purse strings.

On currency markets the greenback dropped as far as 1% to 103.32 yen as more rate cuts are being priced. It lost as much as 0.6% to the euro and was down 0.6% to the safe-haven Swiss franc before erasing those gains. The risk-off mood sent the Australian dollar down 0.6% while the South Korean won skidded 1%. Emerging market and commodity-focused currencies are also taking a beating -- the Norwegian crown is at record lows against the euro and dollar.

What's interesting is that despite the dollar's big weakening in recent weeks, huge oil price falls and waves of rate cuts liquidity and tightening financial conditions are again becoming a worry. If this continues, people are going to be making a grab for dollar liquidity. Cross-currency euro dollar basis swaps 3-month have blown out to the highest since November 2018, a sign of building money market stresses.

The pan-European STOXX 600 and the UK's FTSE 100 indexes are testing June 2016 lows. European stocks have lost more than 23% since Feb. 19 as COVID-19 started spreading fast outside China. Airlines and energy stocks have borne most of the brunt. Air France for instance has lost more than half of its value since mid-February.

In corporate news, companies continue with coronavirus warnings. WH Smith sees 40 million pound hit and airport retailer Dufry said it is cutting jobs and guiding for a single-digit decrease in organic sales in 2020.

Emerging stocks tumbled nearly 4% to more than three year lows, putting MSCI's EM index in the bear club. Most Asian bourses suffering hefty losses -- smaller bourses such as in the Philippines saw stocks plunge more than 10%.

An emerging currencies index hit five month lows --hardest hit are the currencies closely linked to the U.S. such as Mexico’s peso and Brazil’s real have weakened 2-3.5% 3.5%. Oil producing Russia's rouble has fallen 2% today

Oil producers bonds from Angola and Nigeria are at record lows. Finally, S&P has downgraded Lebanon to selective default, a fate others might be experiencing very soon.