Japan quake causes market jitters Peter Taylor, Felicity Williams From: Herald Sun March 12, 2011 12:00AM
A NEW bout of anxiety hit global markets last night as another devastating natural disaster struck, this time in the world's third biggest economy. Amid anecdotal reports of a potentially immense death toll and extensive and indiscriminate damage, economists warned Japan would be counting the cost of the earthquake and tsunami for years to come.
A succession of companies in Japan - Australia's second biggest export market - were warning last night that they could be affected by the disaster as concerns escalated for the welfare of their workers and impact on infrastructure.
The disaster will cast a further pall over Australia's economy as the Gillard Government prepares its crucial May budget.
"Obviously to the extent that it will knock off industrial capacity (in Japan), then that hurts us," said Chris Richardson, partner with Canberra-based Deloitte Access Economics.
"Yet again, a natural disaster is a problem for Australia."
Japan accounted for more than $37 billion worth of Australian exports last year.
Insurance experts warned that global re-insurance companies - already reeling from the natural disasters that bluffed Australia and New Zealand over summer - would potentially pay an extreme cost.
Share markets in Asia and Europe dipped as investors, already anxious about a string of downbeat economic developments in other markets, took further fright.
AMP chief economist Shane Oliver said the disaster would have "a negative impact in the short-term on Japan's share market".
It was unclear how investors would react in the wider region, he said, despite the significance of Japan to Asia and the global economy.
"It could have a negative impact on Japan's economy in the short-term," Mr Oliver said. "That in turn could have a negative impact on Australia in the short-term."
Melbourne-based transport giant Toll Holdings was assessing the impact on the company's Japanese-based subsidiary, Footwork Express - a parcel delivery business with 5500 workers.
Spokesman Andrew Ethel said Toll had set up its own disaster response with teams working in Melbourne and Japan.
"It is too early yet to know the extent of the damage and the effect it will have on our operations," he said.
The Australian dollar lost ground against a basket of currencies.
TD Securities senior strategist Roland Randall said traders were reacting to the potential impact on Australian exports to our biggest customer.
"What we saw in the aftermath of the earthquake that devastated Japan's Kobe district in 1995 was that the yen initially weakened before recovering very strongly as investors repatriated overseas funds," Mr Randall told BusinessDaily.
"Much of those funds are invested in Australian government bonds and bank debt and perhaps equities.
"This is a very big event and we might find that the initial reaction is tempered, but so far Tokyo has managed to get through it as financial markets have remained open there, and that is always a good sign."
Carmaker Toyota said in Japan it needed time to assess the damage to its plants.
- with Steve Lewis, Olga Galacho and Geoff Easdown
