The Nikkei is getting destroyed

Photo by Chris McGrath/Getty Images

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.

Source: Investing.com

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.

After the United States announced new tariffs on Chinese imports, the Chinese have counteracted that move by announcing new tariffs on US imports of their own.

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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