Finance & economics | Tokyo terrors

Why Japanese markets have plummeted

The global rout continues, with the Topix experiencing its worst day since 1987

Japan's Nikkei plunges
Photograph: Reuters

As fears of an American recession spread, stockmarkets around the world have suffered. But none has taken as severe a beating as Japan’s. On August 5th the Topix plunged by 12% in its worst performance since 1987, compared with falls of 2-3% in America, Britain and Europe. The index is now almost a quarter below its peak, reached barely a month ago. The yen, meanwhile, is snapping back: it is up 13% from less than a month ago, when it was at its weakest in 37 years. These sharp moves carry implications not just for Japanese investors and firms. The country’s financial heft means that they could become a source of further volatility in nervous global markets.

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