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Stockmarkets after disasters

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Market tremors

Japan’s earthquake has a devastating effect on the stockmarket too

UNCERTAINTY over the extent of the damage caused by the earthquake in north-east Japan on March 11th, and the associated radiation leak at the Fukushima Daichi power station 140 miles (225km) north of Toyko, has made trading on Japan’s stockmarket an eventful affair. The Nikkei 225 index fell 17.5% in the three trading days following the catastrophe, wiping some ¥37 trillion ($458 billion) off equities. This compares unfavourably with market reactions to other disasters. Once the New York Stock Exchange had reopened six days after the September 11th terrorist attacks, the S&P 500 fell by 11.6% over five trading days, but after a further 14 days it had recovered to its pre-disaster level. After Japan’s last severe earthquake in the city of Kobe in 1995 the Nikkei 225 fell by 7.6% over the next four trading days, but it did not recover to its pre-earthquake level for another 11 months. The Nikkei 225 regained some lost ground today, closing up 5.7%. The Japanese will be hoping for the same bounce back in their own fortunes.

Source: The Economist

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Written by Theophyle

March 17, 2011 at 11:14 am

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