Why are stocks suffering?

Today’s stock market plunge is interesting for two main reasons. First, for those of us who have never traded on the Japanese stock exchange, comes the revelation that the colours used to denote changes in stock prices are the inverse of those used on western markets: red means a share has gone up, green means it has gone down. The same, apparently, is true in China. Fortunately, for the sake of foreign drivers neither country inverts the colour of its traffic lights, although ‘go’ in Japan is denoted by something closer to blue than green…

Second, UK markets seem to have been dragged down in sympathy with others even though the economic news here might suggests they should be rising. It is easy to understand why Japan’s strong bull run should have been sent into reverse by a decision by the country’s central bank to raise interest rates. Yet the Bank of England’s base rate yesterday was cut to 5 per cent.