“The usual bull market successfully weathers a number of tests until it is considered invulnerable, whereupon it is ripe for a bust” George Soros

1. Markets quake as Japan faces nuclear crisis — Markets in Japan and across the world extended their losses as a third explosion hit the Fukushima Daiichi nuclear complex. The Nikkei 225 fell as much as 14% before closing -10.6% at 8,605.15 while the broader Topix index ended -9.5%. The falls came as The Tokyo Electric Power battled to avert a nuclear catastrophe at Fukushima, with “minute levels” of radiation detected as far away as Tokyo. In efforts to stabilize markets, the Bank of Japan added ¥20 trillion ($245B) of short-term liquidity to the record ¥15 trillion it pumped in yesterday.
2. Gaddafi gains momentum, Saudi Arabia intervenes in Bahrain — The Libyan airforce has attacked rebels in the town of Ajdabiya, just 100 miles from the opposition capital of Benghazi, as Muammar Gaddafi moves closer to regaining full control of the country. Elsewhere, Saudi Arabian troops moved into Bahrain after a request from the kingdom to help quell a popular uprising.
3. Moody’s cuts Portugal’s debt rating — Portugal’s ability to avoid a fiscal bailout remained under question Wednesday after Moody’s Investors Service cut the nation’s long-term debt rating by two notches to A3 from A1.
4. FOMC: Economy on firmer footing, no mention of Japan — the FOMC left its benchmark interest rate at 0.25% yesterday, as expected, and signaled that it’s unlikely to expand its $600B bond purchase plan.
5. India hikes rates; inflation, growth risks cited — The central bank increased both its lending and borrowing interest rates by 25 basis points, to 6.75% and 5.75%, respectively.
In a statement accompanying its move on rates, the RBI recognized new risks emerging from rising crude prices and the turmoil gripping parts of the Mideast and North Africa.
6. Congress to extend budget negotiations — the Senate is poised to pass a sixth stop-gap bill to keep the government running, buying Congress until April 8 to work out a budget deal that should have been in place months ago.
7. G-7 intervention puts brakes on the yen — the yen has fallen today after the G-7 agreed to concerted intervention in the currency markets for the first time since 2000. The yen, which was at 81.46 to the dollar midday in Europe, had surged to a record 76.25 yesterday in response to the earthquake, tsunami and nuclear crisis in Japan. This sparked fears about the country’s ability to use exports to help its economy recover from the triple blow. The Bank of Japan started proceedings with a reported purchase of $25B and was followed by its counterparts in the U.K., France and Germany.
8. U.N. approves Libya action; oil volatility to continue — the U.N. Security Council, by a vote of 10-0 with 5 abstentions, authorized yesterday evening a no-fly zone in Libya and approved ‘all necessary measures’ to protect Libyan civilians.
9. Individual Investor Sentiment Drops — According to this week’s survey from the American Association of Individual Investors (AAII), bullish sentiment now stands at 28.5%. This is the lowest optimism has been since August 26, 2010. It is also the fourth consecutive week that bullish sentiment has been below its historical average of 39%.

The week ahead — Economic data from Econoday.com: