Japan’s stock market plunged 12% on Monday, August 5 – its worst day in 37 years. The severity of the fall triggered losses in stock markets around the world. In the US, for example, the Nasdaq index dropped more than 6%, while the S&P 500 dipped by 4.25%.

Markets have since rebounded slightly. The Nasdaq climbed 1.5% on Tuesday, while Japan’s Nikkei 225 closed 10.2% higher than at the start of the day. But there may still be bumpy weeks ahead.

A key reason for these bearish markets is fear of a slowdown in the US economy. US job market data published on August 2 reported the highest unemployment rate since October 2021 alongside weaker than expected job growth. This has caused pessimism to spread among investors about an…