The Fed said it would inject the US$1.5 trillion in temporary liquidity into Wall Street on Thursday and Friday.

The programme will offer three additional sale and repurchase agreements, or repos, with two separate US$500 billion offerings that are to last for three months each and a third that will mature in one month.

“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the Federal Reserve Bank of New York said in a statement on Thursday.

Chairman Jerome Powell instructed the New York Fed to make the changes affecting short-term funding markets, according to the statement.

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But that wasn’t enough to infuse traders with confidence after Trump in his Tuesday speech to the nation failed to address concerns about measures to contain the fast-spreading virus and its impact on the global economy.

Trump instead announced a ban on the entry of most Europeans to the United States; Britain is one exception.

Trading on Thursday was suspended just minutes after the open as a 7 per cent drop in the S&P 500 triggered a so-called circuit breaker that lasted 15 minutes. The halt is intended to give the markets a pause to prevent a free fall.

But the indices continued to slide after trading resumed.

Despite the markets swoon, Trump told a reporter outside of the White House on Thursday “the markets are going to be just fine, just fine”.

When the reporter asked him: “Why do you say that? They’re tanking,” Trump ignored the question and walked away.

US equity entered bear market territory on Wednesday after the Dow closed down more than 20 per cent from its recent peak in February. The wave of selling worsened after Trump addressed the nation late on Wednesday on the coronavirus outbreak that has spread fast throughout the country.

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Investors’ confidence was eroded after Trump failed to announced a comprehensive stimulus plan to combat the outbreak as he had promised on Monday. He had said that a plan he called “very substantial” could include a payroll tax cut and some aid to hourly wage workers to help them deal with the consequences of Covid-19.

But the proposal for a paycheck tax cut was pushed back by lawmakers saying they would rather focus on more targeted approaches to help ease businesses’ and workers’ strains from the outbreak.

Meanwhile, US coronavirus cases continue to grow with the latest confirmed cases exceeding 1,200 and deaths of at least 38.

Overnight, Asian stock markets tanked for the second straight day, with benchmark indexes in Australia, Japan, the Philippines, Singapore and Indonesia following the Dow Jones index into bear market territory.

Hong Kong’s Hang Seng Index fell by as much as 4.4 per cent, flirting with the 20 per cent decline since its April peak – the definition of a bear market – for the second time in as many years.

“The virus spread in the US looks out of control,” said Alan Li, portfolio manager at Atta Capital. “Even the NBA [National Basketball Association] is suspending play.”

A gauge of Euro-area stocks and benchmarks in Italy, Germany, Spain, France and the UK entered the bear market. In the US, the Dow Jones Industrial Average reached that unwelcome milestone on Wednesday – ending the longest bull run in US history.

His speech led to confusion on just what his Europe travel ban means. He also wants to extend US$50 billion in loans to small businesses.

Hong Kong’s Hang Seng Index flirted briefly with bear market territory, closing 3.7 per cent down but just shy of the 24,125.99 level that defines when investors see a declining market. The last time Hong Kong was in a bear market was on August 21, 2015.

Dow enters bear market, losing 20 per cent from recent peak, gripped by coronavirus fears

Mainland China’s stock markets fell as the global outbreak deteriorated at a faster rate. Shanghai’s Composite Index fell 1.5 per cent, while the Shenzhen Composite Index in China’s Silicon Valley fell 2.2 per cent.

The number of new confirmed cases in China, where the coronavirus outbreak was first traced to, continued to slow. Still, China has about 65 per cent of global infections at last count.

The stock market in Tokyo, host of the 2020 Olympics, fell 4.4 per cent, with the benchmark Nikkei 225 plunging for the fifth trading day. Tokyo’s governor Yuriko Koike said the cancellation of the games, due to begin in July, was “unthinkable” and “not an option”.

The International Olympic Committee (IOC) has set itself a deadline of May to make the final decision on whether the games should proceed.

The Kospi in Seoul slipped 3.9 per cent and the tech-heavy Kosdaq shed 5.4 per cent,

Australia’s S&P/ASX200 closed down 7.4 per cent – its biggest fall since October 10, 2008, when it closed down 8.3 per cent. New Zealand’s S&P/NZX50 fell 5 per cent.

“Now we are still no better for wear, and now the ‘no endgame in sight’ risk-off trade takes over as traders are hammering the sell button now thinking the US government has fallen well behind the curve in its Covid-19 response,” Stephen Innes, chief markets strategist at AxiCorp, wrote in a note this morning.

“Travel restrictions equal slower global economic activity, so if you need any more [persuading] to sell after a massively negative signal from overnight trading in US markets, it just fell in your lap.”

Some of Hong Kong’s best-known stocks saw steep declines. Tencent fell 3.6 per cent, Alibaba dropped 4.2 per cent and food-delivery giant Meituan Dianping tumbled 5 per cent.

Chinese oil giant CNOOC fell 8.3 per cent on expectations oil demand will be hit by Trump’s move to further restrict travel from Europe.

Meanwhile, Chinese carmakers listed in Hong Kong plunged after official data showed the country’s February car sales plunged by 79 per cent to merely 310,000 units, the industry’s worst monthly performance since record started in 2006.

In January, car sales declined by 19 per cent to 1.9 million units. Geely Automobile Holdings, which is owned by the acquirer of Sweden’s Volvo, fell 4.5 per cent to H$12.80 in Hong Kong. BYD, China’s largest electric vehicle maker, plummeted by 5.1 per cent to HK$41.70.

Additional reporting by Yujing Liu