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Monday, March 14, 2011

Wall Street set to drop on Japan disaster

NEW YORK, March 14 – Fears about the impact of Japan’s devastating earthquake and tsunami dominated today as Wall Street was set to track global equity markets lower.
Japanese stocks fell 6.2 per cent as investors expected the disaster to take an economic toll. Trading in other stock markets was cautious but steady, although tracking lower in Europe through the morning. The pan-European FTSEurofirst 300 fell 0.8 per cent.
A second hydrogen explosion rocked a stricken nuclear power plant in Japan, sending authorities scrambling to avert a meltdown and creating doubts about the growth prospects of the industry.
“The market is clearly focused on Japan,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. “It is the horror of the human toll and secondarily what it means for global demand,” said Kenny.
Among companies expected to be affected the most were those with exposure to Japan and the nuclear industry. General Electric Co, which has combined nuclear ventures with Hitachi Ltd, fell 2.2 per cent to US$19.92.
The Market Vectors uranium and nuclear energy exchange traded fund fell 17 per cent in premarket trade, while the Global X Uranium ETF fell nearly 15 per cent.
S&P 500 futures lost 8.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 75 points, and Nasdaq 100 futures dropped 18 points.
Japanese ports handling as much as 7 per cent of the country’s industrial output sustained major damage, disrupting global supply chains and causing billions of dollars in losses, industry officials said.
Japanese shares traded in New York also fell. Toyota Motor Co, which said it would suspend production at all its Japanese car plants, dropped 5.6 per cent to US$80.11. The iShares MSCI Japan index exchange traded fund fell 8.7 per cent.
Brent crude touched a two-week low above US$112, down 1 per cent on concerns economic growth would slow in Japan, while easing unrest in the Middle East threw the focus back onto ample oil supplies.
Warren Buffett’s Berkshire Hathaway Inc agreed to buy lubricants maker Lubrizol Corp for US$9 billion to tap rising demand for chemicals used to operate engines and machinery. Lubrizol soared 27 per cent to US$133.77 premarket. – Reuters

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