The Nikkei slid 14% last night (3/15/11), and recovered 3% to end net 11% down for the day after the Japanese government banned brokerages from selling. This was after a 6% down day on 3/14 and a poor prior week.
Both the TOPIX and the Nikkei are now down more than 20% for the year on the risk that nuclear radiation will pose a threat to Tokyo.
Traders in Tokyo and Hong Kong said hedge fund selling of Nikkei futures, especially the Singapore-listed contracts , was behind the deepest drop in Japanese shares. Cash volumes on the Tokyo Stock Exchange hit a record for a second day running.
These equity sales were triggered by the explosion of a fourth nuclear reactor 130 miles away from the city, leaking lethal amounts of radiation.
An explosion and fire at the Fukushima Daiichi nuclear plant at 6: 10 am local time prompted officials within a 30-kilometer radius to stay indoors. This was the message released (translated):
“Please do not go outside. Please stay indoors. Please close windows and make your homes airtight. Don’t turn on ventilators. Please hang your laundry indoors,” Chief Cabinet Secretary Edano said to the residents in the danger zone. “These are figures that potentially affect health. There is no mistake about that.”
According to the Associated Press, about 140,000 people were impacted by the warning.
Soon after the explosion, heightened levels of radiation were detected in Tokyo, 175 miles away. Radiation levels in Tokyo were 23 times the normal level in the city.
According to ABC News, “The Japanese government formally has asked the U.S. Nuclear Regulatory Commission for help in stabilizing its troubled nuclear reactors in the wake of the country’s massive earthquake and tsunami. The NRC sent two boiling water reactor experts to Japan as part of a team of aid workers to help in the recovery efforts.”
With this explosion at Fukushima, since the roof did not fall off the rod casing, the pressure is trapped within the vessel around the core, which will allow radioactive material to seep out. The real risk here is the risk of a meltdown, which could affect the health of millions in Japan and nearby nations. The fuel rods in all three of the reactors at the Fukushima plant appear to be melting.
The Japanese government reacted hours ago by adding $98 million in liquidity to the market, but this did not alleviate the stress in the market as U.S. 10 year yields jumped and DAX fell 4.5% in Europe. Hong Kong’s Hang Seng Index tumbled 2.9%, China’s Shanghai Composite lost 1.4%, Australia’s S&P/ASX 200 shed 2.1%, Taiwan’s Taiex skidded 3.4% and South Korea’s Kospi fell 2.4%. India’s Sensex shed 0.9% in afternoon trading. Brent crude fell more than 2.2% to below $112, while U.S. crude dropped to almost $98 a barrel.
$364 billion in Japanese wealth was just evaporated in a matter of 4 hours. Relying on the Japanese private insurance system is now out of the question.
The document below (LA Blog) shows an overview of the earthquake insurance system in Japan, which certainly cannot cover this mess.
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