A sharp reversal in market sentiment in Tokyo yesterday spread through the overnight session. Investors in Europe and the Americas locked in recent gains and industrial metals dropped in both London and Chicago as nervousness reversed recent strength. Safe haven assets were only mildly bid, suggesting this is corrective action rather than an unfolding reversal.

The Nikkei index plunged more than 3% late in the session. Traders point to anticipation of this morning’s price setting for futures and options expiries as a likely culprit as investors adjusted portfolios. This didn’t comfort European investors and continental markets shed around 1% on average, further spurred by ECB warnings on complacency.

The rot continued in the US, although stronger than forecast reports from Macy’s, NVIDIA and News Corporation contained the drop. The VIX rose, reflecting investor concerns. However gold rose only slightly and bonds fell, discounting a true risk off day.

Futures markets are pointing to a half percent drop at the open in Australia today, keeping the 200 index above the crucial 6,000 level. Although both News Corp and REA group reported strongly for the quarter both stocks may come under pressure given spectacular market gains in the lead up to these releases.