Investing.com - Asian stock markets tumbled on Monday, with shares in Japan falling to a five-week low as growing fears that Spain will need a full-scale sovereign debt bailout prompted investors to shun riskier assets.
During late Asian trade, Hong Kong's Hang Seng Index sank 2.6%, Australia’s ASX/200 Index tumbled 1.7%, while Japan’s Nikkei 225 Index sank 1.9%.
Fears over Spain’s deteriorating fiscal health intensified Friday after the indebted state of Valencia said it would seek financial help from Madrid. Spain’s government also cut growth forecasts for 2013 and said the economy would stay in recession next year.
The yield on Spanish 10-year bonds jumped to a record-high 7.41% during late Asian trade Monday, above the critical 7% threshold widely considered unsustainable in the long run.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the dollar and U.S. Treasuries.
The euro sunk to the lowest level since June 2010 against the U.S. dollar and to an 11-year low against the yen.
In Tokyo, shares in exporters came under pressure from a broadly stronger yen. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.
Shares in Canon lost 4.6%, while consumer electronics manufacturers Sony and Sharp fell 4.1% and 5.15% respectively.
Office equipment maker Ricoh sank 7% after Bank of America cut its target price on the stock to JPY640 from JPY770, citing its high exposure to the European market.
Meanwhile, in Hong Kong, the Hang Seng was dragged lower by heavy losses in index heavyweight HSBC Holdings, which lost 4.6%.
Shares of Europe’s largest bank command a 15% weighting on the Hong Kong benchmark, making it the single largest constituent on the index.
Elsewhere in the sector, China Construction Bank shares fell 1.8%, Industrial and Commercial Bank of China slumped 1.65% and Bank of China declined 1.6%.
Elsewhere, shares in Australia came under pressure from heavy losses in the mining sector, which were dragged lower by the uncertain global outlook and by falling commodity prices.
Mining heavyweights Rio Tinto and BHP Billiton retreated 3.3% and 2.9% respectively, iron ore producer Fortescue Metals tumbled 6.6%, while Newcrest Mining lost 3.95%.
Oil producers Woodside Petroleum and Santos traded down 1.4% and 2.95% respectively.
Looking ahead, the outlook for European stock markets was downbeat, as sentiment was hit by growing concerns that Spain will need a full bailout.
The EURO STOXX 50 futures pointed to a loss of 1.5% at the open, France’s CAC 40 futures dropped 1.2%, London’s FTSE 100 futures shed 0.8%, while Germany's DAX futures pointed to a decline of 1.2% at the open.
Neither the euro zone nor the U.S were to release any significant economic indicators on Monday, so markets looked set to remain focused on developments in Europe.
During late Asian trade, Hong Kong's Hang Seng Index sank 2.6%, Australia’s ASX/200 Index tumbled 1.7%, while Japan’s Nikkei 225 Index sank 1.9%.
Fears over Spain’s deteriorating fiscal health intensified Friday after the indebted state of Valencia said it would seek financial help from Madrid. Spain’s government also cut growth forecasts for 2013 and said the economy would stay in recession next year.
The yield on Spanish 10-year bonds jumped to a record-high 7.41% during late Asian trade Monday, above the critical 7% threshold widely considered unsustainable in the long run.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the dollar and U.S. Treasuries.
The euro sunk to the lowest level since June 2010 against the U.S. dollar and to an 11-year low against the yen.
In Tokyo, shares in exporters came under pressure from a broadly stronger yen. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.
Shares in Canon lost 4.6%, while consumer electronics manufacturers Sony and Sharp fell 4.1% and 5.15% respectively.
Office equipment maker Ricoh sank 7% after Bank of America cut its target price on the stock to JPY640 from JPY770, citing its high exposure to the European market.
Meanwhile, in Hong Kong, the Hang Seng was dragged lower by heavy losses in index heavyweight HSBC Holdings, which lost 4.6%.
Shares of Europe’s largest bank command a 15% weighting on the Hong Kong benchmark, making it the single largest constituent on the index.
Elsewhere in the sector, China Construction Bank shares fell 1.8%, Industrial and Commercial Bank of China slumped 1.65% and Bank of China declined 1.6%.
Elsewhere, shares in Australia came under pressure from heavy losses in the mining sector, which were dragged lower by the uncertain global outlook and by falling commodity prices.
Mining heavyweights Rio Tinto and BHP Billiton retreated 3.3% and 2.9% respectively, iron ore producer Fortescue Metals tumbled 6.6%, while Newcrest Mining lost 3.95%.
Oil producers Woodside Petroleum and Santos traded down 1.4% and 2.95% respectively.
Looking ahead, the outlook for European stock markets was downbeat, as sentiment was hit by growing concerns that Spain will need a full bailout.
The EURO STOXX 50 futures pointed to a loss of 1.5% at the open, France’s CAC 40 futures dropped 1.2%, London’s FTSE 100 futures shed 0.8%, while Germany's DAX futures pointed to a decline of 1.2% at the open.
Neither the euro zone nor the U.S were to release any significant economic indicators on Monday, so markets looked set to remain focused on developments in Europe.