A massive magnitude 8.9 earthquake, the 5th strongest since 1900 and 7th largest in history, struck Japan last night off the coast of Sendai, launching a 10 meter Tsunami across the entire Pacific ocean, killing numerous people and sending Japan into a tailspin. Bloomberg reports: "Prime Minister Naoto Kan mobilized Japan’s Self-Defense Forces and the central bank pledged to ensure financial stability after a magnitude 8.9 earthquake struck off the coast of Sendai, a city of 1 million, causing damage across the east coast of Japan. “I call on citizens to act calmly,” Kan told reporters in Tokyo after convening his emergency disaster response team. “The Self-Defense Forces are already mobilized in various places. The government is making its utmost effort to minimize the damage,” he said, saying later in a news conference that the impact was widespread. The Ministry of Finance said it’s too soon to gauge the economic impact of the temblor, the world’s biggest in more than six years. Japan’s central bank set up an emergency task force and said it will do everything it can to provide ample liquidity. The BOJ, which has already cut its benchmark rate to zero in an effort to end deflation, had last month said the economy was poised to recover from a contraction in the fourth quarter." The financial reaction was swift: "Japan’s stocks slid 1.7 percent in Tokyo today as the earthquake struck less than half an hour before the market closed. The yen advanced 0.2 percent to 82.77 per dollar as of 5:07 p.m. in Tokyo. The MSCI Asia Pacific Index dropped 1.4 percent as of 5:22 p.m. in Tokyo, with losses accelerating after the quake. Futures on the Euro Stoxx 50 Index fell 1 percent. The central bank said in a statement that its settlement system was working and that it was able to settle all accounts today without disruption." News agencies report a ship carrying around 100 was swept away by the tsunami. The assessment of the impact is only starting and will likely be massive when all is said and done.
A BBC News live feed of news can be accessed below.
The clip below summaries the devastation:
A video from Sky News:
And a video from Al Jazeera:
This is the biggest earthquake since the Kobe Earthquake, and for those interested how the market reacted following that tremor, here is a Reuters graph:
As a result of the quake Japan declared a 'nuclear emergency' as attempts to cool reactor at northern plant are 'not going as planned' - official via NHK.Below are maps summarizing the nuclear locations:
In a preliminary report, Jefferies believes that the insurance losses from the earthquake will be at least $10 billion. The final assessment will likely be far greater.
Analysts at Jefferies International said Friday that insured losses from the Japanese earthquake appear limited, based on an early assessment. The broker said it is working on the assumption of a $10 billion industry loss and that the impact on insurers' and reinsurers' balance sheets is likely to be around 5%. Most insured losses are likely to be in property, Jefferies said. It noted that insurance take-up rates are low and many homes will not be covered -- around 10% of households elect for supplementary earthquake cover and coverage is only for a fraction of the property value. The low level of coverage explains why the 1995 Kobe earthquake incurred $100 billion of economic losses, but only $3 billion of insured losses, Jefferies said. Shares in Swiss Re /quotes/comstock/06p!rukn
And as a result of refinery shutdowns, crude has dropped in double digit territory. This is a very temporary response.
We will follow this tragic development.