Markets mixed as US stocks plunge despite Fed rate cut

Markets saw very mixed performances on Tuesday.

The S&P 500 plunged 2.8 percent but the STOXX Europe 600 jumped 1.4 percent.

Asian stocks were mixed. The Shanghai Composite rose 0.7 percent but the Nikkei 225 tumbled 1.2 percent.

US stocks fell despite an emergency inter-meeting cut in the fed funds rate by a half percentage point by the Federal Reserve.

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” the Fed said in a statement.

“Monetary policy is an unlikely cure for the coronavirus,” said Mike LaBella, head of investment strategy at QS Investors.

While some analysts think that fiscal policy is also needed, James McCormack, global head of sovereign ratings at Fitch Ratings, said that “G7 public finances are consistently among the weakest relative to their respective rated peers” and so there is “precious little fiscal space across the G7”.

Earlier on Tuesday, the Reserve Bank of Australia and Bank Negara Malaysia also cut interest rates.