Nikkei Sell-Off Sparks Worries Over Central Bank Stimulus Strategies

Asian markets took a pounding on Thursday as Japanese stocks plunged 6.4%, rendering big losses in China and Southeast Asia.

The Nikkei has lost 21% from its high of 15,942 five-and-a-half years ago. Analysts say today’s mass sell-off is an indication that Japan’s massive April stimulus infusion is faltering.

“We are seeing the first signs of a lack of confidence in the ability of central banks to control the interest rates, to stimulate inflation, and real GDP [gross domestic product] growth rates,” Macquarie’s top Asia research strategist Viktor Shvets told CNBC.

Markets have also been rattled by fears that the Federal Reserve might begin to trim the Fed’s flood of easy money as part of its unprecedented $85 billion-a-month bond-buying bonanza. 

Next month, Federal Reserve Chairman Ben Bernanke will deliver his semi-annual testimony to Congress on July 17 and 18. 

The Dow was trading in positive territory, up 55 points Thursday at noon.