Stocks and US futures sank, with the Nikkei 225 index posting its biggest two-day drop since 1987, while commodities slid and Treasuries jumped on concern a nuclear disaster is unfolding in Japan. Bahrain credit risk soared after Saudi troops entered the nation.
The MSCI World Index fell 2.3 per cent, while the Nikkei dropped 10.6 per cent to the lowest since April 2009 and Standard & Poor’s 500 Index futures tumbled 2.7 per cent. Ten-year Treasury yields slid 12 basis points to 3.23 per cent and the two-year German note yield fell 15 basis points, adding to its longest run of declines since November 2009. The Swiss franc strengthened against its 16 most-traded peers, reaching a record versus the dollar. Oil lost 3.7 per cent to $97.41 a barrel.
Credit-default swaps insuring Japanese debt climbed to a record as Tokyo Electric Power Co’s damaged nuclear power plant was rocked by two explosions on Tuesday as workers struggled to avert a meltdown that may lead to more radiation leaks in the wake of last week’s earthquake. Saudi Arabian troops moved into Bahrain with a regional force in the first cross-border intervention since uprisings swept through parts of West Asia. “In addition to the tragic events in Japan, the market had to contend with a potential escalation of the West Asia situation,” Gary Jenkins, head of fixed-income at Evolution Securities in London, said. “It would not be a surprise if the significant price moves of the last couple of days did not lead to problems elsewhere in the financial system.”