Asian stocks and yen down after quake

| March 11, 2011 | 0 Comments
Asian stocks and yen down after quake

Asian shares and the yen have dropped after a 8.9 magnitude earthquake hit Japan.

The earthquake hit the northeast coast of Japan, followed by a 13-foot tsunami wave sending shares tumbling.

Shares had already lost ground following weak economic data and the Middle East turmoil.

Japan’s Nikkei index was 1.7% lower, but Nikkei futures lost 3% in after-hours trading in Singapore as the damage became apparent.

Hong Kong’s Hang Seng index fell 1.8%, while Shanghai composite was down 0.8%.

However, global insurance stocks were hit as investors digested the costs relating to the disaster.

The disaster could also have a negative impact on economic growth.

Last week, New Zealand Finance Minister Bill English warned that the recent earthquake in Christchurch will impact negatively on economic growth.

Mr English believes the quake could push the nation into recession as Christchurch, which is New Zealand’s second largest city, accounts for approximately 15% of the country’s economy.

Furthermore, Australia recently said it could see its economy contract in the January to March period.

The warning came from Australian Treasurer Wayne Swan after the country was hit by flood and cyclone disasters, which led to a fall in coal and agricultural exports.

However, returning to Japan, rating agency Moody’s was optimistic about the country’s ability to deal with the disaster.

It said: “In a big economy like Japan, the impact of a natural disaster can be absorbed economically by the government and private insurance, so there will be no impact on government’s finances and therefore Japan’s sovereign rating.”

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