In June, Japan's stock market suffered direct hits from the three concerns that were depressing stock prices in the United States -- dismal corporate earnings, shady corporate accounting and the specter of terrorism.
As a result, Japanese stock prices, which until that time had been showing a relatively negative correlation to U.S. stocks, fell in line with those on Wall Street.
The drop became especially rapid after mid-June, reflecting the market's disappointment over the government's additional antideflation measures, which included proposed tax reforms.