Asia markets took “sell in May” sentiment to heart on Monday, with the Japanese benchmark index tumbling over 3%.
The Nikkei 225 closed down 518.67 points, or 3.11%, at 16,147.38, after initially tumbling as much as 4.14% in early trade. On Thursday, the benchmark index shed 3.61%, after the Bank of Japan surprised markets by standing pat on its monetary policy, CNBC reported.
In South Korea, the Kospi ended down 16 points, or 0.80% at 1,978.15. Down Under, the ASX 200 retraced most of its morning losses of over 1% to close down 9.21 points, or 0.18%, at 5,243.00, with the heavily-weighted financials sub-index finishing down 1.56%.
Markets in China, Hong Kong, Taiwan, Singapore and Malaysia are closed for a public holiday.
Japan’s market turmoil may be spreading around the region, analysts said. “While lingering disappointment from the Bank of Japan’s inaction continues to weigh in Japanese markets, negative sentiment started filtering through to other global markets and this ripple effect should be closely monitored as the negative impact from waning global risk sentiment could add more fuel to an already overheated yen,” Stephen Innes, senior trader at OANDA, said in a note Monday. He expects the yen may strengthen further.
Major Japanese exporters sold off sharply, with shares of Toyota closing down 3.75%, Nissan down 4.95% and Honda off 3.98% in the wake of a stronger yen, which is usually negative for exporters as it makes their products less competitive overseas and decreases their overseas profits when converted back into the Japanese currency.
The Japanese yen traded at 106.51 against the dollar on Monday, up 0.16% from an earlier low of 106.14. But that still marks a significantly stronger Japanese currency, as the pair traded at the lower range of the 107 level on Friday afternoon Asia time and at levels above 111 last week.
Sony shares dropped 4.01% after the company reported a loss of 88.3 billion yen ($829 million) for the fiscal fourth quarter on Thursday after the market close.
Airbag maker Takata saw its shares tumble 9.25% after Reuters reported more than 100 million vehicles globally are likely to be subject to recalls over the company’s problematic airbag inflators.
Panasonic dropped 7.37% after Reuters reported the company said its profit is likely to fall this fiscal year.
