Asian shares plunged Thursday after the World Health Organisation (WHO) declared a coronavirus pandemic and indexes sank on Wall Street.

Japan’s benchmark Nikkei 225 dived 4.9% to 18,468.99. Australia’s S&P/ASX 200 dropped 6.6% to 5,348.60. South Korea’s Kospi dipped 4.7% to 1,815.98. Hong Kong’s Hang Seng lost 3.8% to 24,269.06, while the Shanghai Composite index shed 1.3% to 2,928.80.

Thailand’s benchmark plunged 8%.

“Even though we do have substantial support coming through from governments and central banks alike, the dispersion of the virus so far continues to mark the risks of dragging the global economy into recession,” said Jingyi Pan, an analyst at IG in Singapore.

On Wall Street, the Dow’s loss dragged it 20% below the record set last month and put the index in a bear market. The broader S&P 500, which professional investors watch more closely, is a single percentage point away from falling into its own bear market, which would end the longest bull market in Wall Street history.

The decline has been one of the swiftest sell-offs of this magnitude. The fastest the S&P 500 has ever fallen from a record into a bear market was over 55 days in 1987.

South Korea Financial Markets
South Korea’s Kospi index was among several in Asia which plummeted on Thursday due to the coronavirus (Lee Jin-Man/AP)

Vicious swings like Wednesday’s session are becoming routine as investors rush to sell amid uncertainty about how badly the outbreak will hit the economy. The day’s loss of 1,464.90 points wiped out a 1,167-point gain for the Dow from Tuesday and stands as the index’s second-largest point drop, trailing only Monday’s plunge of 2,013.

The S&P 500 plunged 4.9% to 2,741.38, while the Nasdaq gave up 4.7% to 7952.05.

With Wall Street already on edge about the economic damage from the virus, stocks fell even lower on Wednesday after the WHO cited “alarming levels of inaction” by governments in corralling the virus when it made its pandemic declaration.

Investors are calling for coordinated action from governments and central banks to stem the threat to the economy from the virus.

Doubts are rising about the US response even after President Donald Trump announced European travel restrictions and Congress unveiled a multi-billion dollar aid package the House could vote on Thursday.

Investors know that lower interest rates or government spending programs alone will not solve the crisis. Only the containment of the virus can do that. But such measures could help support the economy in the meantime, and investors fear things would be much worse without them.

“The government probably should have been thinking about stimulus last month,” said Kristina Hooper, Invesco’s chief global market strategist. “Every day that passes makes the economic impact of coronavirus that much worse.”

Many investors are worried that a divided Congress will have trouble agreeing to any plan, she said.

The vast majority of people recover from the new virus, but the fear is that COVID-19 could drag the global economy into a recession by hitting it from both sides — supply and demand.

On the supply side, companies may have fewer things to sell as factories shut down and workplaces dim the lights because workers are out on quarantine.

On the demand side, businesses see fewer customers when people huddle at home instead of travelling or dining out.

United Airlines has lost more than a third of its value since February 21 because many people do not want to risk flying. Cruise lines have also been hard hit. Even Apple, which entered 2020 after making sharp gains, has shed 6% since the beginning of the year with the slowdown in output of iPhones in China.

The coronavirus outbreak has moved so fast that its impact has not yet shown up in any US nationwide economic data. Many economists still think the US can avoid a recession, particularly if the disease is under control by the early summer.

But most also think the odds of a recession have risen significantly.

Many analysts say financial markets will continue to swing sharply until the number of new infections stops accelerating. In the United States, the number of cases has topped 1,000. Worldwide, more than 126,000 people have been infected, and over 4,600 have died.

“There’s a real feeling that we don’t know where this ends,” said Brad McMillan, chief investment officer for Commonwealth Financial Network.

Italy’s government announced $28 billion in financial support for health care, the labour market and families and businesses that face a cash crunch due to the country’s nationwide lock down on travel. Many other governments have come up with similar plans.