Japanese Markets Plummet
Japan's market opened strong Wednesday but quickly sank over a lot of bad news.
The Tokyo Stock Exchange's main index plummeted 3 percent to its lowest level in 12 years when an expected injection of public funds to shore up the market failed to materialize.
The dollar gained against the yen.
The benchmark 225-issue Nikkei Stock Average dropped 415.04 points, closing at 13,406.39, the lowest finish since 13,394.31 on Feb. 21, 1986.
On Tuesday, the Nikkei index had slipped 87.94 points, or 0.63 percent.
CBS News Correspondent Barry Petersen reports that it was a gloomy day in Tokyo. The remnants of another passing typhoon left the city overcast.
It also was a gloomy day on the stock market, where analysts blamed the lack of any positive gain on a market that had already taken into account the decision by the U.S. Federal Reserve to lower interest rates.
On Tuesday, the U.S. Federal Reserve lowered the benchmark federal funds rate to 5.25 percent from 5.50 percent a move widely expected after Fed Chairman Alan Greenspan hinted at it recently.
Meanwhile, Japan has plenty of problems of its own.
Earlier this week, a money-lending company filed for bankruptcy, with $16 to $18 billion in debt, the biggest bankruptcy in Japanese history. After months of a special parliamentary session on the economy, that body has still not passed the first - and most necessary - bill that would begin bailing out Japan's debt-ridden banks.
So, a little good news from America isn't a quick fix for what ails Japan.
Consumers aren't spending money, profits are crashing, and the stock market is taking the hit.
"It's a frightening place for a shareholder to be," said one analyst. "Considering that this isn't the first year, the first month, of a major correction. This is the ninth year of a major correction."
A lot of analysts told Petersen that unless this economy turns around soon, just how low it can go will be answered by, a whole lot lower.
Also weighing on the market was the announcement that Moody's Investors Service had cut the debt rating of Nomura Securities Co., Japan's top brokerage and one of the world's largest.
The move was the latest in a series of rating downgrades for Japanese companies. Moody's cut Nomura's long- and short-term debt ratings and its Bank Financial Strength Rating.
The rating agency cited losses in Nomura's international operations and its domestic troubles in the midst of Japan's worst recession since the end of World War II.