The stock market decline in Japan thus far today is second worst to the 1987 crash. As a mere mortal with delayed Bloomberg readings, Topix is now down “only” 12.64 versus a recent 13.18% and the Nikkei is off 12.74%, having recovered a smidge from down 14.1%. Good thing I didn’t listen to some recent stock market recommendations that the Japanese stock market would be up 20% in the first six months of this year.
The yen has firmed only modestly, to 81.55, due to Bank of Japan emergency liquidity operations only partially offsetting a rally. Note the BoJ’s operations are being criticized for being inadequate (ahem, do you think even a central bank can stand in front of a freight train of a major reset in economic fundamentals, unless it chooses to intervene in the stock market directly? Given the current and potential economic damage, the Japanese bond and money markets don’t sound too terrible with call money rates in a much wider trading range than normal. 008% to 0.13% versus the BofJ’s target of 0.1%, so the BoJ appears to be addressing what it considers to be its main priority). From Bloomberg:
Shirakawa yesterday committed at a news conference in Tokyo to keep pumping cash as needed after unleashing a record 15 trillion yen ($183 billion) in one-day operations. The central bank added 5 trillion yen this morning. The bank yesterday also decided to double its asset-purchase program to 10 trillion yen, an increase that’s about one-tenth the size of the U.S. Federal Reserve’s Treasuries-buying effort.
“The Bank of Japan is missing the chance of doing something more aggressive,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. in Tokyo, who used to work at the central bank, said yesterday. “What the BOJ should do now is to anchor investors’ sentiment” with accelerated purchases in its program, he said.
The Topix slid 12 percent at 12:42 p.m. local time, following a 7.5 percent drop yesterday. Japan’s currency traded at 81.52 per dollar, keeping its advance since the March 11 catastrophe to 1.8 percent, amid speculation officials may intervene to sell yen should it soar. Bonds rose, sending yields down for a third day.
US Treasuries have also shot up in Asian trading, with the ten year bond rising nearly two points. Other Asian stock markets, which had shrugged off the bad news in Japan yesterday, are off markedly, with the Han Seng down 3.8%, the Singapore Straits Times down 2.9%, and the ASX down 2.8%. S&P 500 futures are off 31.90 points. Gold is off nearly 1% at 1410 and Brent is at 111.18