Disaster in Japan Triggers Plunge in Market
The earthquake that hit Japan on Friday followed by a Tsunami closed the Japanese Markets and sent Asia and Europe lower.
As we have all seen and heard on news stations across the world, the 8.9-magnitude earthquake rocked the nation’s northeast coast and sent a 30-foot high tsunami crashing inland, knocking out electricity at Fukushima Daiichi Nuclear Power Station and causing cooling systems to fail in at least three reactors.
The need to bring trillions of Yen back into the country to rebuild will cause a short term demand on the Yen.
Looking back in history a 3 month rally took place after the Kobe earthquake in 1995, in fact the Yen rose by 20%.
The Bank of Japan poured a record 15 trillion yen into Japan’s economy as the earthquake triggered a plunge in stocks and surge in credit risk, and the Nikkei had it’s biggest one-day drop since December 08, with the stock average closing down 6.2 percent.
Japan generates 30% of its electricity through nuclear energy, and it is said that electricity has been cut to millions of homes.
Assessing the true magnitude of the damage of this disaster may take months. One can only imagine what the people of Japan must be going through and what it would feel like to be there.
It seems a lot of people are asking whether Mother Nature has turned against us, with the recent floods and cyclones in Queensland, the earthquakes in Christchurch and now Japan has faced not only an earthquake, but a Tsunami as well.
Whatever the reason behind them, it shows us now, more than ever how lucky we are to live on this amazing planet, and for the loved ones around us. My thoughts are with those who have loved ones in Japan right now.
To donate to the Red Cross appeal go to http://www.redcross.org.au/japan2011.htm.
