SYDNEY (March 2): Another painful session for global markets began on Monday with a slump in equity futures along with sovereign bond yields, as investors reacted to a much deeper slide in China’s manufacturing than expected, and the continued spread of the coronavirus.

Japanese stock futures tumbled more than 2% at the open, and S&P 500 contracts slumped over 1%, with a signal from the Federal Reserve Friday that it’s open to easing policy providing little comfort. The yen advanced and oil prices sank further thanks to the demand destruction wrought by the virus.

Australian and New Zealand 10-year yields set new record lows after U.S. ones did so Friday. 

The number of U.S. cases climbed over the weekend, while those in Italy and South Korea jumped. Deaths came in the U.S., Thailand and Australia. Japan woke up Monday to school closures and an increasing number of employers asking workers to stay at home.

Goldman Sachs Group Inc. economists now expect the virus to inflict a “short-lived global contraction” on the world economy that forces the Fed to slash rates in the first half. Fed Chairman Jerome Powell has opened the door to a rate cut, citing the “evolving risks” posed to the U.S. economy from the virus, in a rare statement issued Friday.

“Markets face significant uncertainty in the short term and remain at high risk of more downside given the unknowns around Covid-19,” said Shane Oliver, a global investment strategist at AMP Capital Investors Ltd. in Sydney. Concern remains that “it will disrupt economic activity more deeply and for longer than had been expected a week or so ago.”

Elsewhere, the Mexican peso tumbled about 1% after U.S. President Donald Trump said he is considering increased controls on the border since Mexico reported its first coronavirus case.

Here are some key events coming up:

* A key factory gauge on Monday is projected to show that U.S. manufacturing came close to stagnating last month. The ISM’s purchasing managers index is estimated to fall to 50.5 from 50.9.

* The Reserve Bank of Australia sets policy on Tuesday.

* U.S. citizens in states including California and Texas will vote on “Super Tuesday” for a Democratic candidate to run against President Donald Trump in November’s election.

* The Bank of Canada has a rate decision on Wednesday.

* OPEC ministers gather in Vienna on March 5-6.

These are the main moves in markets:

Stocks

* Futures on the S&P 500 dropped 1.2% as of 8:26 a.m. in Tokyo. The underlying gauge fell 0.8% on Friday.

* Futures on Japan’s Nikkei 225 fell 1.6% in Chicago.

* Australia’s S&P/ASX 200 Index slid 2.2%.

Currencies

* The yen rose 0.2% to 107.66 per dollar.

* The Aussie lost 0.1% to 65.11 U.S. cents.

* The kiwi retreated 0.6% to 62.09 U.S. cents.

* The offshore yuan declined 0.1% to 6.9875 per dollar.

* The euro added 0.2% to $1.1052.

Bonds

* The yield on 10-year Treasuries lost 11 basis points to 1.15% on Friday. Futures rose 0.3% in early trading.

* New Zealand’s 10-year yield declined about 14 basis points to 0.92%.

* Australia’s 10-year yield fell 13 basis points to 0.69%.

Commodities

* West Texas Intermediate crude sank 0.9% to $44.37 a barrel.

* Gold fell 0.4% to $1,579.64 an ounce.