A massive earthquake that measured 8.9 on the Richter scale has hit Japan which has instinctively led investors to sell securities in the region.
The 10 year JGB yield stands at 0.539%, the lowest since June 2003. The Japanese equities market, the Nikkei 225 stands at 10254.43 and the US Dollar / Yen fell 0.32% to 82.69. The Bank of Japan responded to financial market concern and said it would supply adequate liquidity to markets
However, market experts say the real effect on the financial industry is not fully represented yet, as the quake hit just before the close of the markets.
The quake hit off the North Eastern coast and caused a 10-metre-high tsunami to hit the coast. Japan authorities has reported there is a nuclear power emergency situation with four million homes without power, following the largest earthquake to hit Japan on record.
The quake has already had a knock-on effect on European equities. Large reinsurers such as Swiss Re, Hannover Re and Munich Re fell by more than 4%.
“It is too early to tell what the impact will be. The situation is still unclear and is fluid. We are unable to say anything at the moment. It usually takes one to two weeks until we can tell what the impact will be,” Tom Armitage, a spokesman for Swiss Re said. “Japan is within the top 10 of our markets. Swiss Re generated a total of $688 million in life and non-life in Japan out of a total of $25 billion globally.”
The British, French and German insurers, Aviva, Allianz, Axa, fell between 1.3 – 2% in the equity markets.