New Zealand will go into nationwide isolation within two days, after India over the weekend moved to shut down its main government and finance centres, and Australia said it will enforce more stringent controls and close pubs, restaurants and casinos.

To make things worse, US Democrats blocked a coronavirus economic rescue package of as much as US$2 trillion.

“The execution of lockdowns is turning the fears or speculation into reality for investors,” said Sameer Kalra, founder of Target Investing in Mumbai. “And such measures are shocks for everyone.”

Here is a snapshot showing the extent of Monday’s sell-off:

• The MSCI Asia Pacific Index has erased most of the gains from Friday
• New Zealand’s S&P/NZX 50 Gross Index had its worst day or record
• India’s S&P BSE Sensex Index plunged 10%, triggering a trading halt
• Hong Kong’s Hang Seng Index is near its lowest level since December 2016
• Australia’s S&P/ASX 200 index closed down 5.6% at the lowest level since 2012

Meanwhile, US stock-index futures hit exchange-mandated halts for the ninth time in 10 days as investors digested the news that cities from New York to Los Angeles all but shut down and cases rose rapidly.

FTSE 100 Index contracts were down 4.9% as traders priced in a full shutdown for the UK economy.

“Investors sell equities more indiscriminately and more broadly than in previous declines,” said Eli Lee, head of investment strategy at Bank of Singapore.

“We think that the market contour of the Covid-19 crisis is more likely to be W-shaped or U-shaped, instead of a V-shaped recovery if we do not see” a sudden improvement in the virus trajectory soon.

Here are what market participants are saying about Monday’s sell-off:

Not yet the bottom

“The time to start buying into equity-market weakness has not yet arrived,” said Michael Hood, a global strategist for multi-asset solutions at JPMorgan Asset Management.

“The evolution of a medical emergency that has forced the economy into a sudden stop, and a heterodox policy response which may or may not be sufficient to avoid mass layoffs and acute financial system stress.” provide “extreme uncertainty,” he added.

That’s because service industries are contracting at “unprecedented rates” due to the containment outbreak, which is different from past recessions when the economic hits were originated in cautious behavioural swings at companies, Hood said. “This dynamic sets up a substantial challenge for policy,” he added.

Risk aversion

“Risk aversion appears here to stay as investors become more fearful that this could be the worst global recession during peacetime,” Edward Moya, senior market analyst at Oanda, wrote in an emailed comment.

“Volatility was supposed to start to calm down as central banks unleash a wrath of liquidity programmes and stimulus, but coronavirus updates in Europe and the US continue to suggest we are nowhere near being out of the woods or even close enough to guess on when that could potentially be,” Moya said.

A glimpse of hope

That said, stock benchmarks for markets including South Korea, Hong Kong, Japan and Taiwan are trading above their recent troughs, while US futures pared losses after hitting limit-down.

That may be a sign that investment sentiment isn’t that bad, said Alex Wong, director of asset management at Ample Capital Ltd.

“I think the market is expecting the bill to be passed eventually,” Wong said. “It may be a matter of when rather than a matter of if.”