Japan, Europe markets rebound Wednesday
The Nikkei rose nearly 6 percent on Wednesday after two days of sharp drops, but today's gains could be short-lived if the Japan nuclear crisis worsens.
But the Nikkei is still down overall since the March 11 earthquake rattled this and other indexes worldwide.
Today's rebound was preceded by rapid sell-offs and an almost 20 percent drop over Monday and Tuesday. Tuesday alone saw an 11 percent decline in the Nikkei, that market's largest drop in a single day since October 2008 when Lehman Brothers collapsed.
Tokyo Electric Power Co., owner of the Fukushima I nuclear plant now battling to avoid a meltdown, plunged 25 percent Monday, 24 percent Tuesday, and another 25 percent Wednesday. (A quarter-drop in value is the maximum allowed by the Nikkei.)
According to Canada's Globe and Mail, there’s a general belief now that stocks may have been sold off too quickly after the disaster, which helped fuel today's rebound.
Japan’s index is likely to remain volatile until the nuclear power troubles are resolved, reports The Wall Street Journal. "Unless the nuclear-power plant issues are resolved, the reconstruction efforts will not be able to start and only then can we gauge the impact [of the earthquake] on earnings," Cosmo Securities equity strategist Toshikazu Horiuchi told the Journal.
"The markets are still sensitive to news flow coming out of the region, which remains changeable. If we see deterioration in the situation then stocks will be sold, which will weigh on other risky assets and boost flows into the relative safety of US government debt," it reported.