Stocks in Japan were down sharply on Monday, leading the smaller declines suffered in other bourses across Asia. The yen surged to a high of over 18 months versus the U.S. dollar.
In addition, weak earnings were posted by a number of big businesses, which added to the concern over the policy inaction by the Bank of Japan last Thursday.
The ASX 200 in Australia was down by 0.2%, while the NZX-50 in New Zealand dropped by 0.4% and the Kospi in South Korea was off by 0.8%.
The Nikkei index was down by 3.2%. It drop followed the decision by the BOJ last week of not changing its main policy, despite the slowing inflation along with expectations for an increase in its program of asset-purchases.
On Friday of last week, markets in Japan were closed for one of its national holidays. The surge by the yen on Monday to an 18-month high versus the dollar also hit exporters in Japan.
During the weekend, the Treasury Department of the U.S., in its currency report that comes out every six months to Congress pointed to China, Taiwan, Germany and South Korea for relying on federal policies that damage the United States and the rest of the world’s economy.
The statement from the Treasury in the U.S. could discourage authorities in Japan from intervening directly in the country’s currency market said analysts.
A strategist with a bank in Japan said that market sentiment might improve during the upcoming weeks if Japan’s government takes measures involving fiscal stimulus in time for the summit meetings of the Group of Seven later in May.
Besides the dollar falling to the yen, gold traded near a high of 15 months on Monday in Asia, as a weaker dollar and drops in the equity market boosted the demand for the metal.
Gold reached $1.294.32 per troy ounce on Monday, which was just higher than its last close of $1,292.51.
Crude futures were down. Brent crude the world’s benchmark was lower by 36 cents per barrel reaching $47.01.
In Japan, Murata Manufacturing the maker of electronics parts lost 13% after it released a projection for a drop in its earnings during the fiscal year that began during April.
The company cited the higher yen, product selling prices that were lower, higher fixed costs and higher expenses for research and development.
Sony Corp dropped 4% on the day, after the company announced a net loss for its period of January through March, weighed down from its mobile and device communications businesses.