Japan Nikkei 225 plunges 7%, yen surges amid US recession fears

Japanese Nikkei lowered the 225 index by seven percent as investors worried about the possibility of the American recession that affected the international stock market. This sharp decline clearly raises investors’ concern on the implications of a slowdown of the US economy on other economies among them those that have source dependent relationships with the US economy.

The yen which is a safe-haven currency posted significant gains due to the upsets that happened in the markets. People ran to the yen in such a situation, with increasing concerns over the health of the U. S. economy why investing when you can hold a safe haven. The poor performance escalated in the following days due to the rising yen affected Japanese exporters’ earnings since strength in the currency erodes overseas earnings when translated back to yen.

It indicates a general trend of market fluctuations due to sign that the U. S. economy is directionless and possibly en-route a recession. These issues has been compounded by more challenges such as, the monetary policy that was set by the Federal Reserve, the inflation rate which has become a permanent feature in most economies, the geopolitical unrests that has been going on for some time now and has affected most supply chains.

The preparedness of Global markets for stock market volatility is being raised by investors as the U. S economy slows down. Japan being a key monetary ally of the U.S.A., these shifts will affect it more drastically since a poor American economy means a much diminished market for Japanese exports and growth.

This behavior in the market only serve to remind the reality that globalization has made the market interdependent; a change in one of the world’s economy affects it. With increasing concerns over a recession in the U. S., it only remains to be seen how the policymakers and markets function in order to avoid the consequence that may follow and make investors regain confidence.