Why Japanese markets have plummeted

As fears of an American recession spread, Japan’s markets took another beating. On August 5th the Topix plunged by 13% in its worst performance since 1987. The index is now almost a quarter below its peak, reached barely a month ago. The yen, meanwhile, is snapping back: it is up 12% 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.