Asia markets follow Wall Street higher

US market falls are no cause for concern

Keep things in perspective on Wall Street

USA stock markets have ended a day of massive fluctuations on a high note, rebounding after recent steep losses. Following Monday's over 1000 point drop, the Dow Jones Industrial Average briefly fell over 500 points in morning trading.

The increase came on a day when stocks moved by more than 1,100 points. "I do think that volatility is unlikely to reset to the lows that we saw earlier this year".

"The market is pricing today what's going to happen six months from now", Samalin says.

Investors are also fretting over the prospect of rising interest rates, which push up borrowing costs for companies and consumers. His comments countered widespread market speculation that the briskest wage growth in nearly nine years in the United States would drive up inflation, paving the ground for further policy tightening by the Federal Reserve.

It is not clear how the changing economic currents, including tax cuts, will affect company financials ultimately, said Michael Bapis, managing director of The Bapis Group at Hightower, a wealth management firm in NY.

"You live by the sword, you die by the sword, to a certain extent", he said. The Japanese Nikkei 225 plunged 4.7%, while the Shanghai composite pulled back 3.4%.

Markets in London, Frankfurt and Paris had initial losses of up to 3%, before recovering some ground. The British FTSE 100 index fell 2.6 percent. Frankfurt's Dax and Paris's CAC were down 2.3% and 2.4% respectively. Bond prices did tick higher.

The Dow Jones Industrial Average surged 569 points Tuesday, posting the single-largest rally in 15 months.

United States markets opened sharply lower again on Tuesday, but quickly rebounded amid frantic trade that continued throughout the day.

"That's all very good in the real economy ... but on Wall Street, that [raised] potential inflationary concerns, and the US Federal Reserve [is considering] raising interest rates, perhaps".

Al Jazeera's Gabriel Elizondo, reporting from NY, said that economists also believed that the volatility might have been initially driven by concerns related to inflation.

"There are no systemic issues", he told a congressional panel on Tuesday. A lot of them already knew his advice would be not to overreact to a couple of bad days for the market, he said.

How does it affect me?

Fidelity Investments on its Web site cautioned investors that timing the market is hard and that missing a small number of sharply up days could hurt long-run returns on investment.

"The market is really not a place for the average person to be playing around with derivatives".

That means the value of the pension is dependent on the value of the investments in it.

Government data showed the trade deficit rose 12 percent in 2017 to $566 billion, the highest level in a decade.

"It is effectively no change for normal investors, in that you have ridden a wave on the way up, so now is not the time to cash in", said Rebecca O'Keefe, head of investment at Interactive Investor.

How badly will my pension be affected?

Rather than avoiding inflation, such a rate increase may lead to the unintended effect of creating a deflation, which could flip the economy rapidly into recession or worse. Historically, the longest bull market lasted for just over nine years.

Furthermore if you have a while to go before you retire, the shares in your pension fund have just become cheaper to buy - so there is a greater chance of them increasing in value. So it could be argued that the market over-reacted to the impact of the tax cut, and that this past week has been no more than a simple correction of that exuberance.

Will this have a long-term effect?

The gauge of investor anxiety more than doubled on Monday, roiling the market for products betting on low volatility. Instead, it was a healthy market correction that is welcomed and long overdue.

U.S. stock markets appear to be stabilising following a major downturn which has triggered turmoil in financial indices around the world.

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