World stocks mixed after Wall Street sinks despite rate cut

Global stock markets were mixed Wednesday after Wall Street sank despite an emergency US interest cut aimed at defusing fears the virus outbreak might stunt global economic activity.

London opened lower while Germany advanced. Shanghai gained, Sydney and Hong Kong declined and Tokyo was little-changed.

Seoul's benchmark surged 2.2 per cent after the government announced a spending package to pay for medical supplies and aid to businesses hurt by the virus.

Markets appeared to be unimpressed by a pledge Tuesday from the Group of Seven major industrialised countries to support the global economy that included no specific measures.

On Wall Street, the benchmark S&P 500 index tumbled 2.8 per cent despite the Federal Reserve's surprise 0.5 per cent rate cut. It was the index's eighth daily decline in nine days.

China, Australia and other central banks also have cut rates to shore up economic growth in the face of anti-virus controls that are disrupting trade and manufacturing.

But economists warn that while cheaper credit might encourage consumers, rate cuts cannot reopen factories that have closed due to quarantines or lack of raw materials.

"Despite the Fed cutting rates in support of the US market, fear had clearly returned to reign in the markets," Jingyi Pan of IG said in a report.

More reductions may give "limited support," Pan wrote.

"Perhaps besides vaccines, there may be little quick and easy solution to easing the shock for global markets."