In Asian Equity Markets Japan’s Nikkei share average fell sharply on Monday as fear that U.S. inflation may be finally gathering pace pound global equities. The Nikkei fell 2.5 percent to 22,682.08, its biggest one-day decline since Nov 9, 2016, when it was down 5.4 percent after the shock U.S. election win of Donald Trump. The broader Topix fell 2.2 percent to 1,823.74, giving up almost all of its gains so far this year, with small-cap shares hit the hardest with Topix Small falling 2.5 percent. Shin-Etsu Chemical fell 3.9 percent while Murata Manufacturing dropped 3.5 percent. About 93 percent of shares declined while only five percent of shares advanced. The latter included Sony and Honda Motor, which announced strong earnings on Friday. The Nikkei volatility index jumped to 20.45, its highest close in three months.

In Currency Markets the US dollar steadied on Monday after rallying on upbeat U.S. jobs data. The dollar index against a basket of six major currencies stood little changed at 89.127 after gaining 0.6 percent on Friday, when the U.S. payrolls report showed wages growing at their fastest pace in more than 8-1/2 years and fueling inflation expectations. The euro was steady at $1.2462 after losing 0.5 percent on Friday to pull away from a three-year peak of $1.2538 reached on Jan. 26. Near-term focus was on the German coalition talks set to continue later on Monday after Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) failed to conclude negotiations in time to meet a self-imposed Sunday deadline. The Australian dollar traded at $0.7929 after touching $0.7891, its lowest in three weeks following a 1.5 percent fall on Friday.

In Commodities Markets oil prices on Monday extended declines from the end of last week amid a wider market sell off and a stronger dollar, with Brent crude falling to its lowest in nearly a month. Brent was down 1 percent, at $67.91 a barrel, after falling 1.5 percent on Friday. Brent’s weekly was down 2.75 percent last week. U.S. West Texas Intermediate (WTI) crude declined $64.73 a barrel, after falling 0.5 percent in the previous session. WTI fell by 1 percent during the last week. U.S. energy companies did add oil rigs for a second week in a row last week, energy services company Baker Hughes Inc reported on Friday. Drillers added six oil rigs in the week to Feb. 2, bringing the total to 765. Hedge funds and money manager reduced last week their bullish positions on U.S. crude, cutting their net-long positions from a record after three weeks of increases.

In US Equity Markets stocks extended losses on Friday after a round of weak earnings and on the back of robust payrolls data that sent bond yields higher, vexing all three major U.S. stock indexes. All 11 major sectors of the S&P 500 were in negative territory. Technology was the biggest drag, down 2.3 percent, led by Microsoft. The CBOE Volatility index, the closely watched gauge of investor anxiety, jumped to 15.56, its highest level since August 18. The S&P 500 lost 1.52 percent, to 2,778.99 and the Nasdaq Composite fell 1.32 percent, to 7,288.70. Exxon Mobil Corp and Chevron Corp shares were down 5.6 percent and 4.2 percent, respectively, after the oil companies posted lower-than-expected fourth-quarter profit. Alphabet fell 5.0 percent after the Google parent’s fourth-quarter profit came in below consensus on increased spending.

In Bond Markets a strong U.S. payrolls report on Friday raised concerns the Federal Reserve might hasten to increase interest rates to stem inflation, compounding a bond market rout that pushed the yield on the benchmark 10-year Treasury note to a four-year high. The yield on the benchmark 10-year Treasury reached a four-year peak at 2.852 percent. It was last at 2.841 percent, up 6.8 basis points on the day, marking five consecutive weeks of increases for the longest such stretch since late 2016. The 2-year yield touched a more than nine-year high at 2.186 percent before ending lower to 2.145 percent on a bout of safe-haven buying.

Today’s inflection points

• 10:00 GMT+1 EUR PMI composite, final
• 10:00 GMT+1 EUR PMI services, final
• 10:30 GMT+1 EUR Sentix Investor Confidence
• 10:30 GMT+1 GBP PMI services
• 11:00 GMT+1 EUR Retail sales
• 15:45 GMT+1 USD Markit PMI service, final
• 16:00 GMT+1 USD ISM non-manufacturing