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Markets Right Now: Stocks move solidly higher; Dow up 300

08 February 2018

Japan's blue chip Nikkei 225 Stock Average entered a correction as the nation's shares posted the biggest decline since November 2016, following USA peers lower amid rising concern that inflation will force interest rates higher.

Japan's benchmark Nikkei 225 index surged as soon as trading began as investors sought bargains, finishing morning trading up 3.1 percent at 22,270.56.

The steep declines in Asia and Europe followed a heart-stopping Monday that saw the Dow Jones industrial average at one point plunge 1,600 points. South Korea's Kospi gained 0.5 percent to 2,407.62.

Taiwan's Taiex Index also fared better, opening 1.4% higher and climbing above 10,690 at one point. "People were positioned for more central bank easing or continued central bank easing, low rates, and importantly, low volatility", he said.

According to Reuters, before that fall, the U.S. stock market had not seen a decline of more than 5 per cent during more than 400 trading sessions.

"We are reluctant to dismiss the prospect of further market weakness", Loynes added, since the markets had been "complacent" in expecting strong growth and low inflation to continue. The gauge swung between gains and losses of more than 1 percent each for the first time since 2015 and crossed the break-even line at least a dozen times.

A 10 percent drop from a peak is referred to on Wall Street as a "correction".

Steep declines on Friday and Monday wiped out the gains the Dow and S&P 500 had made since the beginning of the year.

"What we're seeing is an attempt at stabilization in USA equity prices following a very sharp selloff", said Peter Kenny, senior market strategist at Global Markets Advisory Group in NY. The Nasdaq composite lost 52 points, or 0.7 percent, to 7,189. Minutes after the bell to signal the start of trading, the FTSE 100 index of leading British shares was down 2.5 percent at 7,151, while the CAC 40 in France slid 3 percent to 5,127. The dollar fell to 109.20 yen from 109.70 yen.

Dubai's stock market closed 1.5 percent lower and Abu Dhabi's shed almost 1 percent on Tuesday in the region's third day of trading for the week.

The Dow skidded as much as 1,500 points, before recovering some of its losses. It fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in New York Tuesday. U.S.jobs data lit the fire at the end of last week, with higher-than-expected wage increases prompting inflationary concerns.

The large share of foreign trading activity in Japan and some other regional markets raised the likelihood that losses seen in the US may spill over into other regions.

United States 10-year yields nudged lower to 2.76 per cent, after going as high as 2.80 per cent earlier in the day. The last such decline came in early 2016, when oil prices were plunging as investors anxious that slowing global growth might sharply reduce demand. Crude oil prices slumped 2.5 percent after the government reported that oil production jumped last week.

Most other regional share benchmarks gave up between 2 percent to 4 percent.

Markets Right Now: Stocks move solidly higher; Dow up 300