Another explosion at a nuclear power station in Japan triggered a 10.55% sell-off in Japanese stocks last night and initiated a massive global flight to safety away from equities into safe haven bonds and currencies.

"The situation at Japan's Fukushima Dai-Ichi nuclear plant worsened overnight with at least one other explosion and fire at the facility," said economists at BMO. "There was some release of radiation and those living within 30km were advised to stay indoors, while those within a 20km range were being evacuated."

Prime Minister Naoto Kan said the risks of further radiation leaks are increasing. Japanese economic minister Kaoru Yosano told reporters the nation's economy is healthy and that stocks are falling because of uncertainty.

S&P 500 futures are a staggering 32.50 points lower at 1,258 and Dow futures have tumbled 232 points at 11,694 - the lowest since early January.

Light crude oil fell 3.24% to $97.93 per barrel, while gold prices surprisingly dropped 2.44% to $1,391.80

Meanwhile, risk averse assets are rallying. Among Treasuries, the two-year yield has firmed 7 basis points to 0.53% and the benchmark 10-year yield has fallen 12.5 basis points to 3.24%. The 2s/10s curve is 6bps flatter at 271bps wide.

"The safe-have Swiss franc and US$ are being bought across the board," BMO reports. 

The drop in Japanese stocks marks the biggest single-day decline since October 2008 despite the Bank of Japan injecting 8 trillion yen into money markets. The volume of trading is considered all the more remarkable considering how short-staffed Japanese desks are.

European markets are currently down 2% to 4%, while shares in China finished 1.38% lower and those in Hong Kong fell 2.86%.

Key Events Today:

8:30 - Little is expected to have changed in the Empire State Manufacturing Survey, which hit an 8-month high last month when it rose 3.5 points to 15.4. Economists anticipate a 16.0 score this month, with predictions ranging between 14 and 20. Any number above zero reflects growth, so these figures are optimistic albeit less encouraging that the Philadelphia Fed numbers.

"We expect the Empire State index to fall slightly to 15.0 in March from an eight-month high of 15.4 in February," said economists at Nomura Global Economics. "The manufacturing sector looks solid, with all the major survey indices reporting healthy results in recent months, but surging energy and commodity prices are likely to begin tempering business confidence."

10:00 - The NAHB's Housing Market Index, a gauge of homebuilder sentiment, has remained stagnant at 16 for the past four months. With any number below 50 representing pessimism, the index is a far cry from optimism and minor fluctuations can be comfortably ignored. It may be worth noting the 6-month outlook improved a point to 25 last month. 

"The index of homebuilders' business sentiment has not been above 20 since August 2007," economists at Nomura Global Economics said. "It is unlikely to break into the 20s any time soon but we expect warmer weather and an improving job market to help push the March index up one point to 17."

2:15 - The FOMC Meeting Announcement isn't expected to produce any major changes in monetary policy. The Fed Funds target rate should remain in the zero to 0.25% range, while its quantitative easing program of asset purchases should remain on schedule to terminate at the end of June. Still, everyone reads the statement and any changes to the language will be closely monitored. Bernanke and the Board of Governors should say the economy continues to improve at a moderate pace, but not fast enough to rapidly repair the ailing labor market.  A comfortable view of inflationary pressures is expected to be communicated, but a nod may be given toward rising food and energy prices as a short-term burden on consumer balance sheets.  A potential wildcard of the FOMC meeting is the chance for a few dissenting votes.