Japanese nuclear crisis: financial markets react
Posted Mar 15, 2011 1:54 pm.
This article is more than 5 years old.
Growing concern about a nuclear power plant crisis in Japan, where radiation levels are now 130 times higher than normal outside the Fukushima power plant, are getting most of the blame for the red numbers on financial markets around the world.
“The situation is still quite fluid and people just don’t know what to anticipate next,” BMO Capital Economist Sal Guatieri tells 660News. “So we’re seeing a broad-based flight to safety, to government bonds, treasuries, into the U.S. dollar and out of equities and out of commodities, out of the Canadian dollar.”
But Guatieri believes the situation is only short-term.
“Once the situation in Japan stabilizes, in particular relating to the nuclear issues, the uncertainty surrounding that issue should evaporate and the markets should get back to more normal conditions,” adds Guatieri.
In liquidating equities, where are the big institutional investors moving their money?
“Whenever you see heightened panic in the global economy and the financial markets, you see a flight to both safety and liquidity,” says Guatieri. “And the most liquid assets are government securities, and that seems to be where hedge funds, pension funds, big investment companies tend to park their funds until the fog clears.”
It’s a trend that’s likely to continue. Guatieri tells 660News major geo-political or weather-related events now produce what he calls abnormal trading patterns.
