Financial markets spasmed, sending U.S. stocks down more than 5 per cent and Bloomberg’s dollar index up to a record, as the economic fallout from the pandemic outpaced the massive response from governments and central banks.

The S&P 500 fell as much as 9.8 per cent, before a late-session bounce trimmed the decline. The Dow Jones Industrial Average briefly wiped out all the gains logged since Donald Trump took office, with investors craving more government spending to offset the impact from the virus.

Bonds tumbled around the world a day after Treasuries notched biggest yield jump since 1982, and municipal bonds extended the deepest rout since 1987 as markets braced for the potential flood of spending. Oil sank 24 per cent to an 18-year low. The dollar strengthened a seventh straight day. The pound hit its lowest level against the greenback since 1985. Dollar-funding markets remained strained, although improved from extreme levels in recent days.

Trump offered few details at a press briefing on the specifics his Treasury secretary is discussing with Congress. The Federal Reserve dusted off crisis-era programs to stabilize financial markets.

Governments have pledged or are considering massive fiscal support to offset the economic shock from the pandemic, with the Trump administration moving toward a big package, but the virus continues to spread at a pace that is forcing massive shutdowns across the globe.

“The missing fundamental ingredient for a sustainable recovery in risk appetite is some evidence that the growth of global COVID-19 infection rates is peaking,” said Paul O’Connor, head of multi-asset at Janus Henderson Investors. “Clearly, we are not there yet.”

The planned U.S. stimulus could amount to US$1.2 trillion, aiming to stave off the worst impact of a crisis that already looks set to plunge many of the world’s economies into recession. Meantime, the Federal Reserve reintroduced additional crisis-era tools to stabilize financial markets. Those responses came after stresses appeared in the short-term funding markets.

“I don’t think we’re out of the woods yet in terms of liquidity,” Mark Konyn, chief investment officer at AIA Group in Hong Kong, told Bloomberg TV. “It’s a question of when the fiscal measures will have the most efficacy.”

Stocks

The S&P 500 Index fell 5.2 per cent to 2,398 as of 4 p.m. New York time.

The Dow Jones Industrial Average decreased 6.3 per cent to the lowest in more than three years.

The Nasdaq Composite Index dipped 4.7 per cent.

The MSCI All-Country World Index declined 7 per cent to the lowest in more than three years.

Currencies

The Bloomberg Dollar Spot Index gained 2.1 per cent, hitting the highest in more than three years with its seventh straight advance and the largest rise in almost four years.

The Japanese yen depreciated 0.7 per cent to 108.43 per dollar, the weakest in more than two weeks.

The euro declined 1.5 per cent to US$1.0836, the weakest in more than three weeks.

The British pound decreased 4.1 per cent to US$1.1561, reaching the weakest on record with its seventh consecutive decline.

Bonds

The yield on 10-year Treasuries rose 14 basis points to 1.21 per cent.

Britain’s 10-year yield increased 20 basis points to 0.756 per cent, the highest in almost 10 weeks on the biggest climb in more than six years.

Germany’s 10-year yield advanced 16 basis points to -0.27 per cent, hitting the highest in eight weeks with its seventh straight advance.

Ireland’s 10-year yield gained 15 basis points to 0.499 per cent, reaching the highest in about 10 months on its fifth consecutive advance.

Commodities

West Texas Intermediate crude fell 17 per cent to US$22.52 a barrel.

Gold depreciated 2.2 per cent to US$1,494 an ounce, the weakest in 12 weeks.