Second Japanese Quake Shocks Stocks, but Yen Rises

Apr 7th, 2011 | By | Category: Business and Finance

A 7.1 aftershock rattled Japan Thursday in the wake of last month’s record quake, sending more tremors through the stock market. Japanese stock futures and Sony stock fell. Meanwhile the yen rose in response to Japanese central bank credit actions.

The new quake struck 215 miles northeast of Tokyo, at about 11:32 pm local time. A possible tsunami alert followed, but was lifted at 12:55 a.m. The quake reportedly caused no new problems at the Fukushima nuclear power plant.

Nikkei 225 Stock Average futures expiring in June dropped to 9,535 in Chicago as of 2:20 am Tokyo time, falling 0.6 percent from the closing level of 9,595 in Singapore and from 9,590 in Osaka, Japan. Coupled with the previous day, this represented the biggest two-day drop since the 1987 stock market crash. The iShares MSCI Japan Index Fund declined 0.9 percent to $9.78 in US trading.

Japanese company stocks were hit hard. Electronics giant Sony, already facing production problems due to plant repairs and shipment delays, saw its shares fall 0.9 percent in New York trading to $30.28. World camera manufacturing leader Canon saw its stock fell 0.8 percent to $42.45.

Meanwhile, the value of the yen rose. On Wednesday, the yen had sunk to a six-month low against the dollar based on speculation that Japan’s central bank would take longer than other countries to raise its interest rates. Thursday, the Bank of Japan announced it would maintain its benchmark interest rate at zero to 0.1 percent and extend a 1 trillion yen credit program to ease cash-flow shortages. A separate credit program of 30 trillion yen and a 10 trillion yen asset-buying fund were left at the same level. In the wake of this development, the US dollar fell to 84.88 Japanese yen, down from 85.47 yen late Wednesday.

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