Japanese stocks rebounded today after suffering their biggest single day fall since 1987. Photo: AFP / Tetsuji Nojuchi
Share markets appeared a bit calmer on Tuesday, with S&P Futures up and the Nikkei recovering 9 percent.
But local commentators are warning there are likely to be bumps ahead for markets and investors.
Markets around the world suffered on Monday due to concerns about the US economy, technology stocks, weaker-than-expected earnings from some countries and the prospect of rising Japanese interest rates.
"A fear factor crept in rather than anything substantially changing overnight," said Devon Funds Management head of retail Greg Smith.
"It was sort of related to the Yen carry trade - the carry trade has been to borrow yen at low rates and invest in tech stocks, which ave been a bit of a one-way bet but tech stocks have been in the back foot - that hasn't just happened in the last couple of days... then the Bank of Japan raised rates but not hugely.
"Probably what we've seen in the last couple of days is a kneejerk reaction. We were due a correction and that's not to say we won't see periods of weakness play out over the next few weeks."
He said there would probably be some "dip buying" that would affect share prices.
"Often after you have a big spill, like things don't keep going up and up, they also don't keep going down and down."
He said investors should expect some bumpiness for a while.
By mid-afternoon today, Japanese stocks had rebounded after suffering their biggest single day fall since the 1987 Black Monday, up nearly 10 percent having fallen by 12 percent the day before.
Australia's ASX and New Zealand's NZX were both down marginally as well. The falls followed significant sell-offs on Wall Street; both the Nasdaq and S and P 500 closed more than three percent down.
KiwiSaver provider Kernel founder Dean Anderson agreed investors should be comfortable expecting there would be larger swings - up and down - in global markets.
"There is a lot of movement of capital at the moment, particularly on the back of the focus on the Japan-US carry trade.
"More broadly, there is a lot of competing market noise. The markets are jumping on these single data points trying to interpret what is next. Last night the US had a positive services sector result, which paints a more optimistic view on the state of the US.
"Tomorrow, NZ will see the latest labour market statistics, ahead of the immigration data next week before the Reserve Bank OCR announcement."
He said with the "heightened state" of the markets, all of those decisions and data points would be extrapolated and could cause large swings.
"For the typical investor though, it is a reminder that these swings go both ways and trying to time them is impossible. Someone who sold in reaction yesterday may equal miss out on a rebound tomorrow."
