Asia markets took "sell in May" sentiment to heart on Monday, with the Japanese benchmark index tumbling over 3 percent and Australian bank shares selling off.
The Nikkei 225 closed down 518.67 points, or 3.11 percent, at 16,147.38, after initially tumbling as much as 4.14 percent in early trade. On Thursday, the benchmark index shed 3.61 percent, after the Bank of Japan surprised markets by standing pat on its monetary policy.
In South Korea, the Kospi ended down 16 points, or 0.80 percent at 1,978.15. Down Under, the ASX 200 retraced most of its morning losses of over 1 percent to close down 9.21 points, or 0.18 percent, at 5,243.00, with the heavily-weighted financials sub-index finishing down 1.56 percent.
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 percent, Nissan down 4.95 percent and Honda off 3.98 percent 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 as of 2:35 p.m. HK/SIN, up 0.16 percent 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.
Kit Juckes, global fixed income strategist at Societe Generale, said the dollar/yen pair "looks like a lemming hurling itself off a cliff, and the yen bulls may end up feeling a bit like lemmings in due course."
Sony shares dropped 4.01 percent after the company reported a loss of 88.3 billion yen for the fiscal fourth quarter on Thursday after the market close.
Airbag maker Takata saw its shares tumble 9.25 percent 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 percent after Reuters reported the company said its profit is likely to fall this fiscal year.
Down under, Australia's major banks dropped, with shares of Westpac closing down 3.54 percent. The bank announced results for the six months ended March 31, 2016, on Monday morning, with cash earnings up 3 percent to 3.9 billion Australian dollar (USD 2.96 billion) on-year, missing the forecast for AUSD 4.07 billion from six analysts polled by Reuters.
In a statement to the Australian Securities Exchange, Westpac said cash earnings growth was lower due to higher impairment charges.
The country's other major banks also sold off, with shares of ANZ down 2.22 percent, Commonwealth Bank of Australia down 2.10 percent and National Australia Bank dropping 2.06 percent.
The Australian dollar was up 0.08 percent at USD 0.7608 in the late afternoon local time, after falling from levels above USD 0.77 last week on the back of weaker-than-expected inflation data. The Aussie will be in focus this week as the Reserve Bank of Australia meets on Tuesday, with some analysts expecting further easing of its monetary policy.
Shares of Virgin Australia gave up gains to close down 5.71 percent, following the company's announcement that it will cut capacity by 5.1 percent in the fiscal fourth quarter, citing uncertainties around the upcoming Federal election, weak consumer demand and the downturn in the resources sector.
In the currency market, the dollar index, which measures the dollar against a basket of currencies, was down 0.10 percent at 92.992 as of 2:45 p.m. HK/SIN, compared with touching levels near 95 in the previous week.
Oil prices retreated during Asian hours, with US crude futures down 0.70 percent to USD 45.60 a barrel in the afternoon, while Brent futures dropped 0.97 percent to USD 46.91.
Energy plays were mixed in Asia, with shares of Santos finishing down 1.67 percent, Woodside Petroleum up 1.41 percent and Inpex dropping 3.76 percent.
On Friday, major US indexes closed lower, with the Dow Jones industrial average finishing down 0.32 percent, the S&P 500 off by 0.51 percent and the Nasdaq composite down 0.62 percent.
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