"Difficult days are ahead for our nation," U.S. President Donald Trump told reporters at the White House on Wednesday.
"We're going to have a couple of weeks, starting pretty much now, but especially a few days from now, that are going to be horrific."
Trump had initially played down the virus' severity, but White House medical experts now forecast that even if Americans follow unprecedented stay-at-home orders, some 100,000 to 240,000 people could die from the respiratory disease.
The World Health Organization said the global case count will reach 1 million and the death toll 50,000 in the next few days. It currently stands at 43,412.
Markets are also steeled for bad news on the economic front when weekly U.S. jobless claims data is released at 1230 GMT.
"The shift in rhetoric from the White House has hurt some of the more bullish traders," said Michael McCarthy, chief strategist at brokerage CMC Markets in Sydney, while optimism about local stimulus was waning quickly.
Australia's benchmark ASX 200 index fell 2.6%, led by falls in bank stocks after New Zealand's central bank ordered a suspension of bank dividends - hitting Australia's banks, which own most of New Zealand's big lenders.
Shelter was sought in the bond market, with the yield on benchmark 10-year U.S. Treasuries - which falls when prices rise - dropping to 0.5680%, its lowest since March 10.
The dollar held its overnight gains.
U.S. JOBLESS SEEN SWELLING
Trump also said overnight that he is considering a plan to halt flights to coronavirus hot zones in the United States, which would hammer an already reeling airline industry and add to an overall slowdown that will curb corporate earnings.
Wall Street's three major indexes fell more than 4% overnight.
"The question of whether the U.S. index goes to test the March lows will be all the talk today," Chris Weston, head of research at Melbourne brokerage Pepperstone, said in a note.
"Earnings estimates are too high," he said. "And when we're hearing of companies curbing buybacks, and shelving dividend plans, then we should expect this to resonate through earnings downgrades too."
U.S. labour market data will likely provide the next test. According to a Reuters survey of economists, initial claims for jobless benefits last week probably surpassed the week-ago record of 3.3 million, with 3.5 million expected.
In currency markets, safety and liquidity remained in hot demand, with the dollar standing at $1.0950 per euro and 107. 31 Japanese yen.
It also mostly held gains against the Australian and New Zealand dollars and rose against emerging market currencies.
Spot gold fell 0.5% to $1,584.33 an ounce.
Oil futures bounced after overnight drops, before paring gains since the demand outlook remains weak and storage tanks are quickly filling with an oversupply of crude.
Brent futures LCOc1 last traded $1 firmer at $25.78 per barrel and U.S. crude CLc1 was 3% higher at $20.96 a barrel.
(Reporting by Herbert Lash; additional reporting by Tom Westbrook in Sydney; Editing by Sonya Hepinstall and Sam Holmes) ((firstname.lastname@example.org; 1-646-223-6019; Reuters Messaging: email@example.com))