Higher borrowing costs will lead to a shrinking housing market and a slowdown in the U.S. economy. Overseas investors, being concerned about the U.S. economic outlook, will pull their money out of the Japanese market.
It's not just the weakness in U.S. stocks this time. The dollar is falling (against major currencies) at the same time, and money is flowing out of the U.S..
They have actively poured their money into blue-chip companies here such as Honda, Toyota, Matsushita Electric and Canon.