■ NIKKEI 225 FALLS 5.8 PER CENT IN EARLY TRADING
■ BOJ PUMPS £53BN INTO MONEY MARKETS
JAPANESE markets were hammered this morning as traders scrabbled to offload exposure to the devastating Japanese earthquake.
The Nikkei was down a staggering 5.8 per cent in early trading to 9,656.71, with stocks in firms including Nissan, Honda, Sony and energy giant Tepco – the owner of one of Japan’s damaged nuclear plants – all untraded due to heavy sell orders.
The market could fall further when the backlog of sell orders are processed throughout the day, traders said.
The Bank of Japan (BoJ) this morning injected seven trillion yen (£53bn) into the economy via its market operations in an attempt to shield its fragile recovery and ensure there is no disruption to the banking system. It is thought the central bank has invested in assets ranging from government bonds to private debt.
It will today announce an emergency “quake budget”, although its monetary options are limited by the fact interest rates are already at virtually zero.
The yen touched a four-month high against the dollar, with traders selling off foreign assets to increase their stock of yen on the expectation of high demand from insurers and companies working on rebuilding the country’s infrastructure. Prime Minister Naoto Kan said he would take firm action against speculative currency trading.
The cost to the insurance industry is likely to run into tens of billions, with the Japanese government taking the lion’s share of the hit due to a scheme providing state insurance to re-insurers for earthquakes.
Toyota, the world’s biggest carmaker, and Nissan have both halted production in all of their Japanese plants. Sony has also suspended production at eight factories.
The death toll yesterday was thought to be at least 10,000, with aid workers working into the night recovering more bodies. In the port of Minami Sanriku in Miyagi prefecture around 9,500 people were missing out of a population of 17,000.
At least 590,000 were living in temporary shelters last night, with 210,000 evacuated from the area surrounding the Fukushima nuclear power station.
Fears of a full-scale meltdown persist, despite an ongoing operation to pump seawater into troubled nuclear reactors to prevent them overheating.
The UN said the situation is no longer a serious threat but Kan stressed the administration is still closely monitoring it.
At least 1.4m people are without running water. Aid agencies are now worried waterborne diseases could quickly spread as the sea of sludge contaminates reservoirs.
A further 2.6m people are without electricity and the government has introduced rolling blackouts in Tokyo and the surrounding areas in a bid to ration energy.