Asian shares and Wall Street futures fell on Wednesday in the first trading session of the quarter as the coronavirus pandemic and the prospect of a global recession tore through investor confidence.

E-Mini futures for the S&P 500 slumped 2.27 per cent as dire predictions of more virus casualties in the US weighed on sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan erased gains to trade 0.33 per cent lower. Shares in South Korea, hit hard by the virus, fell 1.34 per cent.

Japanese shares fell 3.48 per cent as a rapid increase in infections in Tokyo fuelled speculation the government would place the capital on lockdown.

Futures in Europe were also battered with Euro Stoxx 50 futures down 2.99 per cent, German DAX futures off 2.89 per cent and FTSE futures falling 3.09 per cent.

Wall Street tumbled on Tuesday, with the Dow registering its biggest quarterly fall since 1987 and the S&P 500 its steepest quarterly drop in a decade on growing evidence of the massive downturn the pandemic will incur.

US economic activity is likely to be “very bad” and the unemployment rate could rise above 10 per cent because of efforts to slow the spread of the coronavirus, Cleveland Federal Reserve Bank President Loretta Mester told CNBC.

“Investors still want to buy equities, but the coronavirus is making everyone more cautious,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo.

“There are still a lot of risks out there, but if you can identify individual shares with good dividend yields and strong financials, then you can buy at a pretty good price.”

There were some bright spots during Asian trading. Shares in China, where the coronavirus first emerged late last year, rose 0.74 per cent, supported by hopes the world's second-largest economy has started to recover.

China's factory activity improved in March after plunging a month earlier, a private sector survey showed on Wednesday, just scraping into positive territory and beating analysts' expectations.

Australian shares jumped 3.58 per cent, reversing Tuesday's 2 per cent decline, as a slowdown in new coronavirus cases and rising iron ore prices lifted the market.

MSCI's gauge of stocks across the globe fell 0.23 per cent. The index slumped nearly 22 per cent last quarter.

The number of coronavirus infections globally headed toward 800,000. In a positive development, Deutsche Bank analysts noted the global growth in new cases was below 10 per cent for two consecutive days, having exceeded that rate for most of the past two weeks.

Health officials were not upbeat, however, with a World Health Organization official warning that even in the Asia-Pacific region, the epidemic was “far from over.”

The dollar bounced in Asia but gave up gains to trade little changed at 107.51 Japanese yen, as investors adjusted positions before the release of US manufacturing data.

The euro was a tad lower at $1.1026 before data on German manufacturing and the jobless rate in the European Union.

The dollar fell broadly on Tuesday after the US Federal Reserve said it would allow foreign central banks to exchange their US Treasury securities holdings for overnight dollar loans to ease a dollar funding crunch.

The yield on the benchmark 10-year US Treasury note fell to 0.6301 per cent.

US crude fell 1.42 per cent to $20.19 a barrel. Brent crude fell 2.81 per cent to $25.61 per barrel as the US, Russia, and Saudi Arabia jostle over a massive oversupply of oil.

Crude oil benchmarks ended a volatile quarter with their biggest losses in history, with both US and Brent futures hammered throughout March due to the pandemic and the eruption of a Saudi-Russia price war.

Global fuel demand has been cut sharply by travel restrictions due to the coronavirus. Forecasters at major merchants and banks see demand slumping by 20 per cent to 30 per cent in April, and for weak consumption to linger for months.

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