March 16, 2011

Neil Wilson, AAP
Herald Sun

JAPANESE and Australian share markets today regained some lost ground as confidence wavered by the hour with the Fukushima nuclear threat.

Japan’s Nikkei initially had its strongest rebound in a few years of 6.5 per cent while the two ASX key indexes were up by 1.12 per cent before falling back but still posting the Australian market’s first gains in eight days.

ASX indexes followed the Japanese market up, then down to finally rally again toward a positive close after a day of uncertainty in Tokyo.

The benchmark S&P/ASX200 index finished up 29.5 points, or 0.65 per cent, at 4,558.2 points, while the broader All Ordinaries index was up 34.1 points, or 0.74 per cent, at 4,644 points.

On the ASX 24 at 4.31pm, the March share price index futures contract was 32 points higher at 4,567 points, with 125,885 contracts traded.

The Nikkei jumped back from its luncheon slump to be 5.68 per cent higher despite deep concerns over a new earthquake and raised radiation levels from the damaged nuclear site 150km away.

Three fresh earthquakes shook the Tokyo area today at 12.50pm ( 2.50 pm Melb. time) and the crisis over fires in the nuclear plant goes on.

Some multinational firms – including Citigroup and ICAP – gave their expats the option of leaving and many sent their families away from the capital or Japan altogether. Some Japanese companies were redeploying workers away from Tokyo.

The pull back from yesterday’s losses was far from universal in Asian markets.

Singapore’s Straits Times index was up by 0.58 per cent late in the day’s trade, the Seoul composite by a healthy 1.77 per cent but Hong Kong’s Hang Sen was 0.22 per cent down.

Japan’s central bank again injected funds to maintain liquidity for domestic consumers and businesses, with 3.5 trillion yen $43.81 billion release into the economy, following the $183 billion investment two days ago.

Nikkei investors boosted international firms including car makers, with Toyota up 9.1 per cent, Nissan up by 6 per cent and and Honda by 3.9 per cent after days of lower share prices due to plant closures.

Manufacturers which supply 40 per cent of electronic components and 20 per cent of the world’s electronics goods also clawed back some of their losses, with Sony up nearly 9 per cent, Canon 3.1 per cent and Toshiba by 4 per cent.

The movement came after Wall Street closed down 1.1 per cent – a slighter drop than most feared – by rallying towards the end of its session on a positive economic outlook from the US Federal Reserve.

Plant operator Tokyo Electric claims the fire was quickly put out but more smoke was seen billowing from the plant just after 12.30pm (Melb. time) amid reports of storage ponds boiling in plant No.3 and continuing scheduled blackouts across Japan.

Tokyo Electric shares had plunged by 25 per cent in most recent trading, with its losses since the tsunami raising questions on whether it could remain viable.

International anlaysts were also questioning Japan’s AA2 credit rating from Moody’s and how the nation would be able to fund its reconstruction with a debt to GDP ratio already among the highest in the developed world. The nation’s low external debt and high domestic savings rate was pointed out as one iof its strengths.

Falls were smaller in the US overnight and investors were following the confidence of US Treasury officials in the American recovery.

Wall Street opened significantly lower but recovered somewhat during the day, helped by comments from the Federal Reserve that the US economy was on "firmer footing".

The Dow Jones industrial average lost 1.1 per cent to 11,855.42, the S&P 500 dropped 1.12 per cent to 1,281.87 and the Nasdaq composite index fell by 1.25 per cent to 2667.33.

CMC Markets chief strategist Micahel McCarthy said the possibility of a major meltdown disaster had receded somewhat in the minds of investors, though more fluctuations were possible.

"That’s not to make light of the humanitarian disaster that has already occurred, but in terms of the economy, at this stage it is not enough to derail Japan let alone the world," Mr McCrathy said.

Mr McCarthy said the market was ignoring ongoing deterioration in the Middle East’s political situation and the surprisingly soft oil price.

He said uranium stocks shone today on the ASX, regaining between a quarter and a third of their plunge on Monday and Tuesday.

Rio Tinto Ltd-majority owned Energy Resources of Australia was up 73 cents, or 10.33 per cent, at $7.80 and Extract Resources added 46 cents, or 5.75 per cent, to $8.46.

Paladin Energy gained 44 cents, or 13.5 per cent, to $3.70 after saying in late trade that it continued to believe the medium and long-term outlook for nuclear power remained positive.

"Recent events could further exacerbate the supply situation, ironically putting Paladin in an even better position with respect to global demand," the miner said in a statement on Wednesday.

Rio Tinto was up $1.53 at $78.94 and fellow mining giant BHP Billiton put on 60 cents to $43.57.

Banking stocks were mixed, with Commonwealth Bank up 25 cents at $50.00 and Westpac down 13 cents to $22.46, while ANZ inched one cent lower to $22.62 and NAB was seven cents firmer at $24.35.

Among energy stocks, oil and gas giant Woodside was up 37 cents at $41.95 while coal miner Macarthur Coal put on 59 cents, or 5.69 per cent, to $10.95.

The spot price of gold in Sydney at 4.35pm was $US1,397.40 per fine ounce, down $US17.37 from Tuesday’s closing price of $US1,414.77.

Preliminary national turnover was 4.49 billion securities worth $7.40 billion, with 844 stocks up, 404 down and 295 unchanged.