European shares steady. Global stocks pause after coronavirus shakeout

Global stock markets stabilised on Tuesday after a wave of early selling petered out and Wall Street futures managed a solid bounce after the previous day’s sharp selloff on fears about the spreading coronavirus.

European shares recorded their worst one-day loss since June 2016 on Monday as worries about the spread of the new virus far beyond China whacked global markets and risk sentiment. However, the pan-European STOXX 600 index rose 0.6% in early trade in London, with Italian shares, which tumbled 5.4% on Monday, also 0.6% higher. Italy is grappling with the worst outbreak of coronavirus in Europe.

MSCI’s All Country World index, which tracks shares across 47 countries, was down 0.16%, paring some earlier losses when Asian markets were trading. The index suffered its biggest daily drop in two years on Monday.

Euro zone government debt markets stabilised, with Italian bonds on steadier ground after suffering their worst day in over two months. Some dealers cited a Wall Street Journal report on a possible vaccine as helping sentiment, though human tests of the drug are not due until the end of April and results not until July or August.

Whatever the cause, E-Mini futures for the S&P 500 bounced 0.7% to pare some of the steep 3.35% loss the cash index suffered overnight.

In Asia earlier, South Korea’s hard-hit market eked out a 0.6% rise and helped MSCI’s broadest index of Asia-Pacific shares outside Japan fight back to flat. Japan’s Nikkei was down 3.4%, catching up with the global selloff after having been shut on Monday, while Shanghai blue chips eased 1.6%.

Central banks across Asia have already been easing policy, while governments have promised large injections of fiscal stimulus, something western countries might also have to consider.

Oil steadied after shedding nearly 4% on Monday. U.S. crude was up 0.2% at $51.55, while Brent crude firmed 0.4% to $56.51.