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Earthquake, tsunami and nuclear crisis take toll on Japan's economy

Nikkei index dropped almost 11 per cent today, after Japan’s prime minister announced a radiation leak had been detected at the Fukushima power station.

Image: AP Photo/Koji Sasahara

JAPAN’S NIKKEI INDEX dropped almost 11 per cent today as the earthquake-shattered country faces an unfolding nuclear crisis following the detection of radiation outside the Fukushima power plant.

The benchmark Nikkei stock index sank 10.6 per cent – over 1,000 points - to close, after hitting a midday low of over 14 per cent down.

The broader Topix lost 8 per cent.

Other Asian markets were also down, as large Japanese investors such as insurance companies and hedge funds pulled money from overseas and repatriated it ahead of the mammoth job of rebuilding, according to Tom Kaan, head of equity sales at Louis Capital Markets in Hong Kong.

Investors felt the biggest shock waves when Japan’s Prime Minister Naoto Kan announced that radioactive material had leaded from the Fukushima Dai-ichi plant – and more leaks were possible.

The world’s largest car maker Toyota said it would suspend manufacturing at domestic plants until later this week, with a production loss of 40,000 cars. Other manufacturers like Sony and Honda were also forced to halt production. Damage to roads and distribution systems made it all but impossible to move products.

Ports were closed, steel plants stopped producing, and the country was being urged to conserve power. With manufacturing all but paralyzed, exporters were also hammered — Panasonic was down 11.2 per cent, Sharp slid 8.5 per cent, and Sony lost 8.9 per cent.

Fears about the safety of nuclear power weighed on the shares of companies involved in uranium mining. Energy Resources of Australia Ltd, one of the world’s largest uranium producers, fell 14.3 per cent in Sydney.

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Elsewhere in Asia, South Korea’s Kospi was down 2.4 per cent to 1,923.92, and Australia’s S&P/ASX 200 fell 2.1 per cent to 4,528.70. Hong Kong’s Hang Seng index slumped 3.3 per cent to 22,568.28, and mainland China’s Shanghai Composite Index lost 2 per cent to 2,879.09.

On Wall Street yesterday, concerns over the economic impact of the earthquake and tsunami in Japan led to a broad sell-off. The Dow Jones industrial average lost 51.24, or 0.4 per cent, to 11,993.16.

Benchmark crude oil for April delivery dropped $1.99 to $99.20 a barrel in electronic trading on the New York Mercantile exchange yesterday.

- AP

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