US pre-open: Futures hit 'limit down' despite interest rate cut from Fed

US futures hit "limit down" in pre-market trading despite the Federal Reserve launching an extensive monetary stimulus campaign aimed at curbing slower economic growth amid the fallout from the COVID-19 outbreak.

As of 1220 GMT, Dow futures were down 4.56%, while S&P 500 and Nasdaq-100 futures were 4.78% and 4.55% lower, respectively.

The Dow closed 1,985.00 points higher on Friday following the Dow's worst day since 1987's Black Monday rout in the previous session.

With the SPY ETF, which tracks the S&P 500, plummeting 9% in pre-market trading, the index was on track to trigger a "circuit breaker" at the open which will see trading halted temporarily. Dow Jones and Nasdaq ETFs were also down 8%.

The Federal Reserve cut interest rates to between 0.00% and 0.25% on Sunday as it announced the launch of a $700bn stimulus programme to help counter the impact of the coronavirus pandemic.

The Fed said in a statement: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States.

"The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook.

"The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goal."

The central bank also said it was renewing its bond-buying campaign. It will buy at least $500bn in Treasury bonds and at least $200bn in mortgage-backed securities to lower rates for mortgages and other consumer and business loans.

However, news that US COVID-19 cases had grown to 3,774, with 69 deaths, were weighing on sentiment.

Oanda's Craig Erlam said that if the Fed's dramatic easing measures were intended to support global markets: "I can't imagine the carnage we would have faced today without them."

Erlam said: "As ever, officials have the extremely difficult job of striking the right balance in response to the coronavirus, between providing sufficient support and not creating mass hysteria. Some may suggest that the Fed cleared ventured too far towards the latter but I think they've probably done what's necessary and anyone that thought the situation wasn't that bad to begin with was kidding themselves.

"These markets are wild and today is merely a symptom of that. As was Friday, by the way. Near 10% gains on Wall Street in this environment is utterly ridiculous. The simple fact of the matter is that we're still in the getting worse phase and not that close to turning a corner so we better get used to these markets and I, for one, am happy central banks are acting so drastically."

On the macro front, the New York Empire State Manufacturing Index for March will be released at 1230 GMT.

While no major corporate earnings were scheduled for release on Monday, Apple shares were down more than 11% after announcing that it would close all of its retail stores outside of Greater China until 27 March.