Stock market experts are bracing themselves for what the week may bring. The massive earthquake that struck Japan Friday could tip the scales in the country's efforts to reduce its debt and turn its economy around, analysts said.
Analysts at Capital Economics wrote, "The timing of the disaster could not have been much worse," The Washington Post reported Saturday.
The center of the earthquake hit a relatively unimportant area from an economic point of view, the Miyagi Prefecture, which accounts for 1.7 percent of the country's overall economy. Nevertheless, it will cost tens of billions of dollars to repair the damage and many industries were affected.
While the 8.9 magnitude quake was massive, it did not hit major industrial areas as hard as the 1995 earthquake that struck Kobe. The damage from Friday's tremor, however, does include major damage to a nuclear power plant and millions are now without power, the Post reported. The Wall Street Journal also reported that many major industrial firms had suspended operations to assess damage and make repairs.
An explosion was heard at Tokyo Electric Power Co's nuclear power plant Fukushima Daiichi and customers of Tepco power were told to curb energy use, the Journal said.
Various plants owned by Toyota Motor Corp. Honda Motor Co., Nissan Motor Co., Sony Corp., Panasonic Corp., Toshiba Corp and Asahi Kaasei Corp. suspended operations after the quake. Honda reported that a male employee in its research and development center in Tochigi Prefecture had been killed when a cafeteria wall collapsed. Thirty other employees in different Honda facilities suffered injuries.
Honda said work at its motorcycle plant in western Japan would continue.
The earthquake struck 30 minutes before the close of stock trading in Tokyo, but sent an already negative market down lower. The Nikkei 225 index lost 1.7 percent on the day and analysts expect markets will adjust lower next week.
"The greater the social and economic damage, the larger the threat to the government's ability and willingness to ward off a fiscal crisis," Capital Economics analysts wrote.
