TOKYO (REUTERS, BLOOMBERG) - Asian shares and Wall Street futures fell on Wednesday (March 11) as growing scepticism about Washington's stimulus package to fight the coronavirus outbreak knocked the steam out of an earlier rally.

Markets had been recovering from a brutal global selloff on Monday that was triggered by the double shock of an oil price crash and the worsening outbreak.

Those gains were short-lived in Asian trade, with US S&P 500 futures falling as much as 2.6 per cent. Japan's Nikkei index was down 1.3 per cent while Australia's S&P/ASX 200 fell 2.1 per cent. South Korea's Kospi was down 1.5 per cent.

Singapore stocks, which began Tuesday up 0.9 per cent, was trading down 32.66 points or 1.2 per cent to 2,799.88 at 1:18pm. The Government on Wednesday said it is is working on a second stimulus package as the global coronavirus situation has worsened since the Budget was presented last month. A poll of private economists, meanwhle, tipped the economy to shrink by 0.8 per cent in the first quarter of this year.

China stocks held steady as worries over the virus outbreak in the country ebbed after President Xi Jinping's visit to Wuhan, and as investors expect Beijing's stimulus to underpin its economy. The Shanghai Composite Index was up 0.3 per cent, while Hong Kong's Hang Seng index edged up 0.1 per cent.

Earlier this week, US President Donald Trump said he would take "major steps" to ease economic strains caused by the spread of the flu-like virus. Headlines focused on discussions of payroll tax cut, which helped lift market sentiment.

However, the lack of major announcements since then has left some investors unimpressed.

"We were promised something substantive from the Trump administration, and if it hasn't come yet at this hour, then it looks like it is being delayed," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"That's why markets have a negative tone. From a global investor's perspective, there are still a lot of downside risks."

"A comprehensive approach that indicates the White House is alive to the human and economic viral risks could soothe volatile markets," said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Ltd. "However, if the promised response is delayed, denied or deemed inadequate, market chaos may follow."

On Wall Street all three major indexes jumped nearly 5 per cent on Tuesday, one day after US equities markets suffered their biggest one-day losses since the 2008 financial crisis.

The US dollar gave up gains and fell against the yen, the Swiss franc and the euro as uncertainty set in.

Benchmark US 10-year Treasury yields were last at 0.7603 per cent, more than double Monday's record low yield of 0.3180 per cent.

Further gains in yields could be limited because there are still strong expectations that the US Federal Reserve and other central banks will support fiscal stimulus with monetary easing.

Market participants largely expect the Fed to cut interest rates for the second time this month at the conclusion of next week's regularly scheduled policy meeting after surprising investors last week with 50 basis point rate cut.

The euro is also in focus before a European Central Bank meeting on Thursday, where policymakers will face pressure to ease policy after Italy put its entire country on lockdown in an attempt to slow new coronavirus infections.

US crude fell 0.52 per cent to US$34.18 a barrel, dashing hopes that the market could stabilise.

On Monday the oil market collapsed and futures saw their largest percentage drop since 1991 Gulf War as a price war between Saudi Arabia and Russia broke out.

Many analysts say investors need to remain on guard for further market volatility, because the coronavirus still poses a risk to public health in many countries, which could place additional strain on the global economy.

The virus emerged late last year in the central Chinese province of Hubei but has since spread rapidly outside of China, leading to more than 4,000 deaths.

Restrictions on movement and factory closures aimed at stopping the epidemic are putting the brakes on global economic activity.