Japan plunges 7% as Bernanke rattles global markets
Japan’s Nikkei 225 index has closed down 7.3% as comments from Federal Reserve chairman Ben Bernanke over a potential scaling back of quantitative easing spooked investors worldwide.
The Nikkei shed over 1,100 points to close at 14,483, with Japanese 10-year government bond yields rising to over 1% for the first time in a year, as weak manufacturing data in China compounded concerns.
The fall is the largest seen since the aftermath of the country’s March 2011 earthquake.
The Nikkei remains up almost 40% this year, but today’s plunge represents a blow to the increasing number of investors backing the country’s ‘Abenomics’ programme to revitalise its economy.
That followed an earlier 0.8% fall in the S&P 500, prompted by Bernanke’s comments at a Congressional hearing.
The central bank chairman (pictured) suggested the Fed’s asset purchase programme may begin to taper off later this year if it sees further improvements in the economy.
Japan’s slide was accompanied by a further rise in US treasury yields, which had first spiked during US trading yesterday.
The 10-year yield rose as high as 2.06% before falling back to 1.99% overnight, while the US dollar reached a three-year high against a basket of currencies.
The Japanese yen reversed recent weakness to itself rise against the dollar.
UK and European shares looked set to open sharply lower this morning as a result of the moves in Asia and elsewhere.
Futures pointed to a drop of over 1% on the FTSE 100, bringing the index back down from the fresh 12-year high of 6,840 reached yesterday afternoon.
This article was first published on Investment Week