Japanese nuclear fears hammer markets again

Growing fears about Japan’s nuclear emergency have sent shockwaves through global markets again, with Wall Street dropping 2% and the Australian market opening 1.5% lower before recovering slightly.

Fears of a full-scale nuclear disaster rose overnight when Gregory Jaczko, chairman of the US Nuclear Regulatory Commission, told politicians an “extremely high” levels of radiation had been detected at the stricken nuclear power facility at Fukushima.

“We believe that secondary containment has been destroyed and there is no water in the spent fuel pool. And we believe that radiation levels are extremely high, which could possibly impact the ability to take corrective measures,” Jaczko said.

The US Energy Secretary, Steven Chu, added to fears when he said that “the events unfolding in the Japan incidents actually appear to be more serious” than the nuclear disaster at the US nuclear power plant Three Mile Island in the 1970s.

However, Japanese officials have played down the fears, saying that they are close to restoring power to the plant, which would allow them to re-start cooling systems and prevent a full-scale meltdown.

While the Japanese officials have been unable to provide a timeline for the restoration of power, the UN’s nuclear agency says the Japanese plant operators are doing all they can to prevent the situation from worsening.

But other nations are taking no chances. While the Japanese have set up the 30 kilometre exclusion zone around the nuclear facility, the US government has warned citizens within 80 kilometres of the plant to evacuate.

And Australia’s Foreign Minister Kevin Rudd has told Australians still in Tokyo to consider leaving.

“That applies to Australians working in the broad business community, the social sector, the education sector or whatever, as well as to our embassy staff to whom we are providing the same opportunity, because the embassy, by definition, is in Tokyo,” he said on ABC TV program Lateline last night.

Major foreign companies with operations in Japan, including furniture giant Ikea and retailer H&M have also started to evacuate staff.

The growing threat of disaster is taking a brutal toll on global markets. Investors are concerned about the overall disruption to the global economy if the nuclear problem worsens and the prospect that Japanese investors could pull back from foreign markets as they seek to fund relief and reconstruction efforts.

Wall Street’s benchmark Dow Jones Index fell 2% last night and the ASX 200 Index quickly followed after the opening bell, dropping 1.5% almost immediately.

However, the market has since recovered to be around 0.5% down in morning trade.

Fears that the Japanese will pull money out of foreign markets have also hit the Australian dollar, which has slumped to a six-month low of 97c this morning.

The seriousness of the crisis in Japan was also reinforced last night when Japanese Emperor Akihito appeared on television to give a rare public address.

The Emperor said he was “deeply concerned” about the “unpredictable” situation at the Fukushima Daiichi power plant.

“I sincerely hope that we can keep the situation from getting worse.”