First the expectations of negative earnings surprises in the Tech sector are growing as earnings season gets underway this week.

Then the flat yield spread in the U.S. is going to make it difficult for Japanese banks and traders to borrow abroad without paying higher rates in the short-term. That hurts the profitability of the long-term lending business, so the Japanese lenders are now under pressure.

The rally in crude oil last week (to above $64) has also made it difficult for the major Japanese chemical companies, and the raw material and energy costs of the steelmakers is also a concern.

Finally, the USD has been dropping against the Yen. That makes Japanese exports to the U.S. more expensive, so the auto manufacturers have also been under pressure.

In equivalent Dow 30 terms, the Nikkei has suffered a 125-point loss today. The market can be characterized as volatile, as traders are nervous following an extremely bullish move in the major Japanese indexes in 2005.