|Copyright:||(c) 2011 The New York Times Company|
|Source:||New York Times Digital|
Unnerved by the earthquake and tsunami that struck Friday, investors in
After falling more than 14 percent at one point, the Nikkei closed down 10.6 percent at 8,605.15 points, the lowest in nearly two years. The broader Topix, or Tokyo Stock Price Index, ended 9.5 percent lower.
Unlike on Monday, when stock market losses were largely confined to
The Kospi in
Analysts said investors were fleeing risky assets like equities and commodities and switching into safer cash and bonds. Volumes were much higher than normal.
Philippe Gijsels, head of research at BNP Paribas Fortis in
“I’m worried,” he added, “the equity markets have come up so far, so fast, with only minor corrections that the market is vulnerable.”
In addition, he said, policy makers have limited scope to handle major economic shocks, given the high level of budget deficits in the West and the fact that monetary policy options are almost exhausted.
Declines in Japanese and other Asian stock markets accelerated after
“People have gotten very nervous,”
He noted that officials had been saying that the radiation risk was low, but “when they say it’s a problem for our health, that will be too late.”
Investors also kept an eye on fast-moving events in the
Like equities, commodities are perceived as being a risky asset and hence investors have been looking to reduce their exposure to oil, which has been surging in recent weeks.
“Sentiment has turned more risk averse,” Benjamin Schröder and Peggy Jäger at
In a bid to quell the growing concerns, the Japanese central bank continued pumping liquidity into the financial system on Tuesday, adding to record amounts already injected on Monday.
At the end of a policy meeting on Monday, the
Analysts broadly welcomed the central bank’s efforts.
“They have done the right thing — in fact, it’s pretty much the only thing they can do right now,” said Mr. Lenherr of LGT. In the medium term, he added, the authorities “will have to discuss a new fiscal package, and fiscal consolidation will have to go out the window for the time being,” because of the cost of the earthquake.
Mr. Wolter of RBS said the authorities in
“They are dealing with a disaster on an unprecedented scale; the response to date has been pretty formidable,” he said.
The response also has helped prevent a more marked surge in the yen . The Japanese currency has come under upward pressure, rising in the wake of the quake on Friday as companies and insurance companies repatriated cash to help pay for the reconstruction costs. The Japanese currency was trading at