When you’re a large, trade-reliant economy watching your two major trading partners raising tariffs against each other, potentially starting a new trade war, your stock market is unlikely to have a good day.
And throw in having a currency that’s deemed to be a safe-haven in times of market volatility, and the day carries the potential to get a whole lot worse.
This is exactly what’s playing out on Friday in Japan, with the Nikkei 225 tumbling over 3% in early trade.
It’s currently off 753 points, or 3.5%, at 20,838.50.
Here’s the somewhat ominous chart, showing the index sliding to the lowest level October, through the previous lows for 2018 set in February.
Along with a stronger Japanese yen, which makes the nation’s exports less competitive, the main catalyst behind the selloff is what appears to be a trade war between the United States and China, two of Japan’s major trade partners.
They’re also the largest economies in the world, meaning the potential for a global trade war has increased significantly.
Clearly, and understandably, investors not only in Japan but also elsewhere in the world don’t like the news one bit.
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