“Hectic and confused.”
That’s how trader Tsutomu Yamada at kabu.com Securities Co. describes the morning session in Tokyo. Traders were still trying to understand what exactly happened on Wall Street, explained Yamada. The confusion over Wall Street’s plunge and concerns over a weakening euro drove the Nikkei down nearly four percent, ending the morning session down 3.74%. Exporters took the hardest hits, beginning with Nintendo dropping 11 percent on news its profits would decline more than expected.
The sell off wasn’t limited to Japan: Look across the Asia Pacific region and the markets are down across the board.
Concerned, the Bank of Japan injected two trillion yen (US$20 billion) in short term lending Friday morning. A spokesperson with Japan’s central bank says “the aim is to increase a sense of security in the markets by providing ample funds.” Read here: Calm the market’s jittery nerves.
Yoshito Sengoku, Japan’s Minister in Charge of National Policy spoke to reporters Friday morning in Tokyo, saying that the Greece crisis will have a “limited impact on Asian economies.”
But Kirby Daley, senior strategist at Newedge Group in Hong Kong, believes that the market reaction to the Greece crisis is not a limited, knee-jerk reaction. “The drops will not likely be as violent as post-Lehman, but risk aversion is setting in for the long-term, as markets over-celebrated unsustainable stimulus. We may see some relief rallies, but the overall trend should now be firmly down for stocks,” said Daley.
Afternoon trading has begun again in Tokyo. Traders have had 90 minutes during the lunch break to catch their breaths here in Japan after the morning session. Fingers crossed, they say.
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