Markets mostly rise after emergency Fed cut sinks Wall St

Asian and European stocks mostly rose Wednesday after the Federal Reserve sprang its first emergency rate cut since the global financial crisis to counter economic fallout from coronavirus.

In the first unscheduled rate reduction since 2008, the Fed axed its key interest rate by a half point to a range of 1.0-1.25, arguing it was needed because "coronavirus poses evolving risks to economic activity".

Wall Street then tanked on fears the central bank was in panic mode over the spreading COVID-19 disease, which has so far killed 3,200 people worldwide and infected more than 90,000.

However, equities in Europe and Asia mostly advanced on Wednesday as investor nerves subsided, dealers said.

In commodities, oil rallied on indications that the OPEC crude producing cartel could slash output this week in order to prop up prices.

"Market sentiment certainly seems to have stabilised after a historic US session which saw the role of monetary policy undermined as traders sold into an extraordinary bout of easing from the Fed," said IG analyst Joshua Mahony.

"The US economy is actually yet to feel a significant economic impact from this virus, and thus the decision to take such drastic action provided markets with a warning of exactly how big this threat is," added Mahony, noting the Fed still has a scheduled rate call in two weeks.

In late morning deals, London stocks jumped 1.3 percent, while there were 1.0-percent gains in Frankfurt, Paris and Milan.

The deep cut in US rates on Tuesday followed a statement from G7 finance ministers that they stood ready to take "appropriate actions... including fiscal measures" in response to the virus.

Lower interest rates traditionally boost the global economy because they curb loan repayments for businesses and individuals, and also increase the level of consumers' disposable income.

Yet many analysts predict the US rate cut will not be enough to offset virus-fuelled economic turmoil.

"It is the first emergency cut since the financial crisis -- and the rate cut will be fairly ineffectual in offsetting the coming hit to the economy from the coronavirus," said Kingswood chief investment officer Rupert Thompson, predicting that the Bank of England could follow the same path.

"While these moves may help support equities short term, they do little to reduce the enormous uncertainty over the extent of the eventual spread of the coronavirus and the damage it could have on global growth."