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Japanese stocks tank 7% after Bernanke says QE may slow

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Japanese stockmarkets have plunged at the highest rate since the March 2011 tsunami and nuclear disaster after the Federal Reserve suggested it could start to slow its bond-buying programme.

Japan’s Topix index dropped by almost 7 per cent to 1,188.34 points overnight while the Nikkei 225 closed 7.3 per cent down at 14,483.98. Every company on the Nikkei lost ground yesterday – something which has not been seen since April 2005.

The slide came after Fed chairman Ben Bernanke said the central bank may start to taper its $85bn-a-month bond-buying scheme “in the next few meetings” if the country’s labour market continues to strengthen.

Speaking before Congress, Bernanke said: “If we see continued improvement and we have confidence that is going to be sustained, then in the next few meetings we could take a step down in our pace of purchases.

“If we do that, it would not mean that we are automatically aiming towards a complete wind-down.”

Before yesterday’s sell-off, the Nikkei 225 had risen almost 80 per cent since November 2012, as investors took heart at the monetary and fiscal easing ushered in by prime minister Shinzo Abe.

Stockmarkets across the globe have been touching new highs in recent weeks as investors bet that central banks such as the Fed and the Bank of England are poised to keep pouring fresh liquidity into the financial system. 

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  1. Just because this Bernanke bloke scored a few goals for Villa this season, it doesn’t give him the right to spook the markets!

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