Author: Luke Hartigan, Lecturer in Economics, University of Sydney

This week has been a rollercoaster ride for investors. Financial markets across the world were gripped by a fearsome selloff that surprised even seasoned investors with its speed and ferocity, as well as what caused it all in the first place. Two key factors drove the market rout. First, a weaker than expected US jobs number. Second, an interest rate move by Japan’s central bank. Fear of a US recession began to spread like wildfire, and panic set in across global markets. Japanese stocks saw their biggest single-day drop since 1987. But now, in the relative calm after the storm,…