The Tokyo Stock Exchange and uranium miners plunged on Monday as investors reacted to the ongoing consequences of the deadly earthquake and tsunami.
Japan‘s central bank injected 15 trillion yen ($178 billion Cdn) into money markets to stem worries about the world’s third-largest economy. It also expanded an asset buying fund by 5 trillion yen to 40 trillion yen ($59 billion to $476 billion) as a step to support businesses.
By flooding the banking system with cash, the central bank hopes financial institutions will continue to lend money and meet the likely surge in demand for post-earthquake funds.
Japan’s economy has been ailing for 20 years, barely managing to eke out weak growth between slowdowns. It is saddled by a massive public debt that, at 200 per cent of gross domestic product, is the biggest among industrialized nations.
Eleven of the country’s nuclear power stations have been shut down, and concern is mounting that the Fukushima Daiichi plant may be on the verge of a meltdown in the wake of Friday’s quake. At the very least, it seems unlikely that Japan’s nuclear industry will ever return to its former size.
Nuclear-related stocks were hit hard on North American stock exchanges. TSX-listed Cameco Corp. tanked as the market opened in Toronto, losing more than $8 or 22 per cent to $28.39. Denison Mines was also down sharply, shedding 80 cents or 25 per cent to $2.40 within minutes of opening. Uranium One Inc. was also down 27 per cent to $4.35 in early trading.
The benchmark Nikkei 225 stock average shed nearly 634 points, or 6.2 per cent, to 9,620.49, extending losses from Friday and wiping out all the gains for this year. It was the Japanese stock market’s worst day since the 2008 financial crisis.
Shares of Tokyo Electric Power Co. nose-dived more than 23 per cent as it struggled with malfunctioning nuclear reactors and a power shortage that led the company to warn it may need to ration electricity.
Companies with nuclear power-related businesses registered staggering losses, including Hitachi Ltd., down 16.2 per cent, and Toshiba Corp., down 16.3 per cent. Mitsubishi Heavy Industries slumped 10 per cent and Kobe Steel Ltd. skidded 6.4 per cent.
Other Asian markets were off, but just a fraction of the losses in Tokyo. The Hang Seng index in Hong Kong fell and Singapore’s Straits Times index were both down about 0.5 per cent.
In Europe, Britain’s FTSE 100 was down 0.4 per cent at 5,806.75 while Germany’s DAX slid 1.8 per cent to 6,858.84. France’s CAC-40 was 0.6 per cent lower at 3,905.42.
North American markets were also lower, with the TSX/S&P Composite Index down 83 points or 0.5 per cent lower to 13,591. The Dow Jones Industrial Average was 49.6 points lower to 11,994 in New York.
Infrastructural damage feared
Oil prices dropped below $99 a barrel, with the disaster threatening to send Japan, the world’s third-largest economy, into a recession that could crimp demand for crude. There is concern that widespread infrastructural damage may cripple factory output, a worry the central bank echoed Monday.
The tsunami and earthquake that hit Japan on Friday about the time the market closed has killed about 2,800 people, but the death toll may be as high as more than 10,000. It has caused a massive disruption to transportation in the northeastern part of the country, and led to severe damage to several nuclear plants.
The electricity shortage caused by the damage has forced leading Japanese car companies — Toyota, Honda and Nissan — to close for an indefinite period, and electricity companies are warning of rotating blackouts on Monday to conserve power.
The 1995 earthquake that devastated Kobe cost $132 billion US, said Sheila Smith, an expert in Japan Studies at the Council on Foreign Relations, a U.S. think-tank.