Japan: Nuclear fears send stock markets tumbling

17th March 2011

Some of the more pessimistic analysts are now factoring in what a nuclear disaster that affected Tokyo for a long period of time could mean globally.

Such concerns led to the S&P 500 to fall for the third day running as reported here on Business Week.

In the UK, investors broke for cover with the market falling below 5,600 with Citywire describing it as a stampede, although such bearish behaviour was heightened by fears over European debt, particularly of a Portuguese default and continuing Middle East turmoil.

The big problem with Japan is securing accurate information but many investment analysts have also admitted that every disaster is different and trying to extrapolate from previous ones difficult.

For example looking to what happened after the Kobe earthquake in Japan in 1995 may provide something of a guide. (It ultimately exposed Barings bank) but there was no nuclear factor.

However, most investors believe that the big economies and the US in particular should not be blown too far off course.

Website Seeking Alpha lives up to its name. 

Contributor Ian Wyatt picks out stocks likely to suffer directly such as Texas Instruments because one of its Japanese plants has been damaged. Likewise Seeking Alpha notes that Uranium-linked stocks worldwide have been hit while solar has actually rallied given most investors' belief that policymakers' faith in nuclear power will have been shaken, a belief confirmed by the actions of the German government.

The website notes that even safe havens such as gold and silver have fallen with investors moving to cash. However it adds that when gold and silver start to rise again, it may signal that investors' money will then move back into markets.

In the UK, fund managers also say if you have money invested in Japan leave it there rather than crystallising loses as reported here on Investors Chronicle.

However broker Hargreaves Lansdown's investment manager Ben Yearsley is also pretty strong in his message ‘don't plough money in'.

See also: Investing in misery – Commentary suggesting the Japanese disaster presents a buying opportunity for investors has been slammed by some readers as distasteful.

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