The Rout in Japan Continues

Another very bad open, and no reason to expect much improvement.

From the related Bloomberg story:

Japan’s stocks plunged, with the Nikkei 225 Stock Average set for its worst two-day drop in more than a decade. The yen strengthened while commodities prices and European shares plunged, adding to concern world economic growth is faltering.

Honda Motor Co. fell to the lowest since September 2005, and Canon Inc. extended its decline for the year to 18 percent after the yen rose to the highest in more than two years against the dollar and five months versus the euro. Both companies generate the majority of their revenue abroad.

The Nikkei 225 Stock Average slipped 641.21, or 4.8 percent, to 12,684.73 as of 9:55 a.m. in Tokyo. The index has lost 8.4 percent in the last two days, its biggest drop over two sessions since December 1997. The broader Topix index fell 61.55, or 4.8 percent today, to 1,232.19.

Europe’s Dow Jones Stoxx 600 Index sank 5.7 percent yesterday, pushing it into a bear market, and the price of crude oil dropped to the lowest in more than a month.

“Losses are causing investor sentiment to take a turn for the worse,” Terunobu Kinoshita, who helps manage $785 million at Fund Creation Co. in Tokyo, said in an interview with Bloomberg Television. “Previously investors had drawn comfort from the strength of emerging markets and European shares.”….

The yen strengthened to as high as 105.62 against the dollar, a level not seen since May 2005. Versus the euro, Japan’s currency rose to as high as 152.32, the strongest since August 17. A stronger yen decreases the value of Japanese exporters’ sales made overseas when converted into local currency.

Crude oil for February declined 2.1 percent to $88.69 per barrel in New York yesterday, the lowest since Dec. 12. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 3.4 percent, the most in two months.

Print Friendly, PDF & Email


  1. doc holiday

    They just added this: Asian stocks tumbled, extending a global slump that has wiped more than $5 trillion from stock markets this year, on concern world economic growth is faltering.


  2. doc holiday

    Oh wait, I see a trend:

    More than 77 billion was wiped off the value of Britains stock market yesterday in its biggest one-day percentage loss since September 11, 2001. Shares across the world plunged over fears that the threatened US recession will undermine the global economy. Londons leading shares tumbled by 5.5%

    This is interesting because Japan is down about 25% in 6 months, while FTSE & S&P 500 are both down by about 15%, but then again, Tuesday….

  3. doc holiday

    Nikkei closes @ 12,573.05 – 752.89

    The Hang Seng Index is expected to fall further when the market reopens after the mid-day break.

    “”People are predicting a 500-point fall in the US market today, so when the European traders come in this afternoon we can expect further sell orders, “” he said.

    Yes, I thought the S&P is overvalued by about 3% for fair value, but with the globe selling off like this, Im thinking we are entering the reality of a liquidity trap, where thinking doesnt matter and there is no place to run or hide. Gulp!

    Glad I went into max safety 6 months ago!

  4. Yves Smith

    I still don’t like seeing this carnage. It is one thing to keep saying the train is going off the cliff, quite another to see the wreckage and broken bodies. And this is far from over. This leg down will turn out to be about the monoline crisis, even if that isn’t yet widely recognized as a big big problem.

  5. foesskewered

    doc holiday and yves

    as at midday asian time, the slaughter continues unabated, korean trading was even briefly suspended. One wonders though, is that in anticipation of a sell off of bonds insured by ambac or an unexpected correlation “event” such as funds deciding to short the market. Seriously doubt if the limp potato that bush proposed was the real reason. Theories anyone?

  6. doc holiday

    yves, et al,

    I hate to post sometimes, but Im just trying to add some stuff; hope you dont mind! Im interested in the global loss at this point, with yet another example from Australia:

    Investors have slashed close to $100 billion off the value of local stocks amid fears the world is set for an economic slowdown.

    The local share market today closed down 7.3 per cent, with the All Ordinaries Index losing 409 points to 5,222, that is where it was in October 2006.

    Thats, $100 B there

    $77 B yesterday alone in London, and it would be nice to have someone keeping track of this: Re: … extending a global slump that has wiped more than $5 trillion from stock markets this year.

    That sum was days ago I think, so the global loss is going to be very damaging!

  7. Yves Smith

    The speed of this move is breathtaking, and I am not certain at all as to the cause. Foesskewered seems right that the Bush speech seems an insufficient cause, but it might have made it crystal clear to those who might believe otherwise that he is a hopeless lame duck, and there is therefore no one who can take the helm in DC if things do fall apart.

    Cassandra said the ratchet down in Japan last week has the flavor of a big portfolio unwinding. That might have triggered other trades.

    The monolines seem like a huge culprit. The other big culprit is the rise of the yen. Bye bye for now carry trade. A lot of the sales (certainly in Australia and emerging markets) are probably due to carry trades being unwound.

    Beyond that, your guess is as good as mine.

  8. doc holiday and the holywater

    I’m slow on the draw here and sorry to post, but you both are thinking in terms of insurance failures, which is a smart thing to wonder about. Ambac was granted some slack last night by counterparties, but at some point, the reality of who is guaranteeing what and by what means of collateral is going to be tested, verified and audited and there will be a serious shortage of cash that will force people to play a new less liberal game.

    I read: MBI was forced into selling $1 bln on ‘surplus notes’ on Friday via Lehman. MBIA’s CEO, Gary Dunton, was quoted that “MBIA was committed to keeping its AAA rating ‘without qualification’.

    The reason for this global crash is obvious, there was too much synthetic crap and no regulations, not to go off another rant, but 3 years ago, Bush & Greenspan and some of these so called leaders should have raised rates and slowed down the obvious housing bubble which was overheating; what did greenspan say, there was some froth in the housing industry? What a a pig to not recognize the future damage which was to unfold at some point, like this week; what the hell were these retarded people thinking 3 years ago? Why did they not act to slow the tsunami flood of endless easy credit?

    Now, instead, Bush walks up to the mic and wants a magic $500 billion stimulus plan to save the $15 Trillion chaos that he helped to pump; this insanity pisses me off, because we dont just have a housing bubble that blew up, we have an interconnected- linked-backed-bubble that is a web of complex insanity that has no solution, no model, no hope of being solved, because this is entropy baby, you start with chaos and it expands into a more complex dynamic that doesnt turn around and fit back into the magic money bottle. The meltdown is just begining and we have some idiot that will give a state of the union dog and pony show, which should be done with puppets that are playing with matches and lighter fluid!

    I feel better now….

Comments are closed.