Stocks dropped in Asia on Wednesday despite gains on Wall Street on hopes the Trump administration will act to cushion the economic pain of the coronavirus outbreak.

Japan's benchmark Nikkei 225 lost 2.2 per cent to 19,427.38. Australia's S&P/ASX 200 plunged 3.6pc to 5,725.90. South Korea's Kospi shed 2.9pc to 1,905.50. Chinese shares erased morning gains. Hong Kong's Hang Seng fell 0.6pc to 25,238.08, while the Shanghai Composite dipped 0.5pc to 2,980.50.

After the strong rebound yesterday, Asian markets were quite flat this morning. There is consistent fear about the spread of the coronavirus in the US as well as in Europe, said Louis Wong of Philip Capital Management.

He added that investors are still worried that those fiscal stimulus packages may not be able to contain the virus outbreak as well as to mitigate the impact on the economy.

Countries are shifting into damage-control mode as infections spread, prompting sweeping controls on travel and other public activities.

In Japan, a task force set up by the prime minister approved a 430 billion yen ($4.1 billion) package Tuesday with support for small to medium-sized businesses.

Other governments in Asia have announced billions of dollars' worth of stimulus and other measures to help protect their own struggling economies.

Australia's government announced a $1.6 billion virus-fighting package on Wednesday and reportedly plans an additional $6.5 billion in economic stimulus to be proposed on Thursday.

On Wall Street, the day's moves were a microcosm of the severe swings that have dominated recent weeks. Market watchers say investors want to see a big, coordinated response from governments and central banks to shore up the virus-weakened economy.

The S&P 500 surged as much as 3.7pc in the morning, only to see the gains evaporate by midday.

The index then bounced up and down before turning decisively higher after President Donald Trump pitched his ideas for a break on payroll taxes and other economic relief to Senate Republicans.

By the end of trading, the S&P 500 was up 4.9pc. It erased three-fifths of Mondays loss, which was the sharpest since 2008, when global authorities banded together to rescue the economy from the financial crisis.

The volatility reflected the mood of a market just as preoccupied with the virus as the rest of the world. Since US stocks set their record high just a few weeks ago, traders have crossed over from dismissing the economic pain created by COVID-19 thinking its similar to the flu and could stay mostly contained in China to being in thrall to it worrying that it may cause a worldwide recession.

While they won't cure illnesses or get quarantined workers back into factories, spending and stimulus programs would put cash into the hands of households and businesses while health experts try to corral the virus. That could stave off or at least moderate a possible recession.

Investors saw glimmers of a coordinated response, which led to Tuesdays optimism.

At a White House press briefing Monday night, Trump said his administration would be asking Congress to cut payroll taxes and pass other quick measures aimed at easing the impact of the coronavirus on workers.

Treasury Secretary Steven Mnuchin also met with House Speaker Nancy Pelosi, whose support would be needed for any deal in a deeply divided Congress. Mnuchin called the meeting productive.

But prices oscillated as markets waited for details of Trumps plan.

After a meeting with major health insurers, Trump said the government is working with the cruise line industry, one of the hardest hit by the virus.

That helped lift the market, which had earlier flipped to losses amid doubts that the government would announce anything soon.

Treasury yields pushed higher on Tuesday but fell back early Wednesday. The bond market rang warning bells about the virus long before the stock market, and a rise in yields signals fear has receded a bit.

The 10-year Treasury yield fell to 0.67pc from 0.79pc. A week ago, it had never been below 1pc.The S&P 500 rose 4.9pc to 2,882.23. The Dow Jones Industrial Average advanced 4.9pc to 25,018.16, and the Nasdaq composite jumped 5pc, to 8,344.25.

That pulled the market a bit further from the brink of a bear market, signified by a drop of 20pc from a record. The S&P 500 is down 14.9pc from its high.

If it can rally back to that point, it would extend the longest-ever bull market, which began its climb after the market hit bottom on March 9, 2009.

Oil prices, which plunged 25pc on Monday amid a price war between producers, have steadied in the past two days.

For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.

The vast majority of people recover from the new virus.

According to the World Health Organisation, people with mild illness recover in about two weeks, while those with more severe illness may take three to six weeks to recover.

In mainland China, where the virus first exploded, more than 80,000 people have been diagnosed and more than 58,000 have so far recovered.

But because the virus is new, experts can't say for sure how far it will ultimately spread.

That has investors worried about a worst-case scenario for corporate profits and the economy, where factories and supply chains are shut around the world due to quarantines and people stay huddled at home instead of working or spending.