Investing.com - Shares in Tokyo dropped sharply on Tuesday as investors increasingly question the direction of monetary policy by the Bank of Japan.
Japan's introduction of negative interest rates this month has set investors to worry that conventional monetary policies are not working to combat a global economic slowdown.
The Nikkei 225 slumped 5.14%, while the S&P/ASX 200 fell 2.92%. Markets in China are shut for a week-long holiday.
The NAB business confidence survey came in at plus-2 for January as expected and the NAB business survey dropped to plus-5 from plus-7 the previous month. The market is looking ahead to Wednesday’s testimony by Fed Chair Janet Yellen and Friday’s data on U.S. retail sales for further indications on the strength of the world’s largest economy.
Overnight, U.S. stocks fell sharply on Monday, extending losses from late last week as a major sell-off on European markets spilled across the Atlantic amid persisting concerns related to dwindling energy prices and the ramifications of negative interest rates among the world's largest central banks.
In Europe, shares in a host of prominent financial firms plunged, amid concerns related to withdrawals from key markets, a flattening yield curve and indications of imminent asset write-downs. The sell-off in bank stocks dragged down the major indices overall, as the Stoxx Europe 600, France CAC 40 and Germany Dax all fell by more than 3% on Monday, pushing the overall indices to their lowest levels in 16 months.
The Dow Jones Industrial Average fell 177.92 or 1.10% to 16,027.05, despite a slight rally late in the session. At session low's, the Dow fell by as much as 401 points. The NASDAQ Composite index and the S&P 500 Composite index also fell to their lowest intraday levels since 2014, while suffering one of their worst two-day decline since the August flash crash. Stifled by further losses among biotech stocks, the NASDAQ lost 79.39 or 1.82% to 4,283.75, dropping to its lowest since October, 2014.