Tokyo stocks rebounded slightly in a roller coaster session Wednesday after Wall Street finished the previous day with solid gains following a global rout.
Crude oil futures continued to fall Tuesday, even as US stocks were found their footing after the biggest one-day drop for the Dow Jones Industrial Average. It's switched between gains and losses several times since then.
Eisai Co rose 5.4 percent, Astellas Pharma 4.5 percent, Inpex Corp 4.0 percent and Honda Motor 3.3 percent.
The Dow is still up 21 percent over the past 12 months, and the S&P 500 is up 15 percent.
Declines of 10 per cent or more are common during bull markets. That's less than the 10 percent drop that is known on Wall Street as a "correction".
Investors were disappointed at the market's failure to rise further amid the emergence of selling on a rally, market sources said, adding stocks bowed to futures-led selling in the afternoon. There hasn't been one in two years, and by many measures stocks have been looking expensive.
The market turmoil began early last week but has now intensified.
The British pound dipped 0.5 percent to $1.3876, the weakest in nearly three weeks. Treasury yields swung before nudging higher.
The market mood turned decidedly fearful the last two days.
Investors have sold shares out of concern that with inflation creeping higher, the Federal Reserve might raise interest rates more quickly, making it more expensive for people and businesses to borrow money and derailing the economic expansion and the prolonged share price rally. Higher rates act like a brake on the economy by slowing down borrowing and lending.
That left some popular exchange-traded products that investors use to benefit from calm market conditions facing potential liquidation.
Andrew Zimbalist, an economist at Smith College in MA, said the volatility in the United States - and the impact on Asia - was "not surprising in the least" given what's been happening. Experts do think the global economy will keep growing this year even though that is likely to bring more inflation. "A very crowded trade, it just took a while to unwind that", said John Lynch, Chief Investment Strategist at LPL Financial in Charlotte, North Carolina.
United States crude futures traded at $63.53 per barrel, down 1.0 per cent in Asia.
Oil prices also dropped, with global benchmark Brent futures hitting a one-month low of $66.90 per barrel on Monday.
Japan's Nikkei dropped 4.6 per cent. Heating oil dipped 3 cents to $1.99 a gallon.
The dollar fell 0.3 percent to 108.73 yenJPY=, stoking fears about Japanese companies' earnings.
Tokyo stocks attracted hefty buybacks from the outset of Wednesday's trading, pushing up the Nikkei average by more than 740 points by midmorning. The U.K.'s FTSE 100 Index tumbled by 2.6 percent, while the French CAC 40 Index and the German DAX Index slumped by 2.4 percent and 2.3 percent, respectively.
In other commodities trading, copper fell 3 cents to $3.19 a pound.
Zhang Ming, a senior economist at Beijing's Chinese Academy of Social Sciences who warned about the potential volatility of the US stock market in the Communist Party's flagship People's Daily a month ago, agreed.