The benchmark Nikkei-225 index tumbled 2.31 percent to 15,713.39 points. The Nikkei, down 9% for the week so far, is on track for its worst weekly percentage performance in almost five years.
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Bellwether stocks BHP Billiton and Rio Tinto were down by 3.7% and 2.3% respectively as concerns about lower global commodity prices continued to affect the market.
The dollar index eased 0.1 percent to 95.939, not far from a 3-1/2-month low of 95.663 set on Tuesday.
Tokyo’s Nikkei 225 lost 5.3 percent to 14,886.75 and Hong Kong’s Hang Seng fell 0.8 percent to 18,395.69.
The dollar rose to 112.52 yen on Friday from 112.29 the previous day, while the euro fell to $1.1269 from $1.1315.
South Korea’s main Kospi index was down 1.3% at 5.45am GMT while the Kosdaq index of smaller stocks was suspended after plummeting more than 8%. The brake recalls similar triggers that stopped trading on the Chinese stock market earlier this year, as panic sent investors rushing for the exits.
Chris Weston, chief market strategist at IG said: “The idea that central banks are now fully targeting the interest rate structure and putting a gun to domestic banks’ heads in a fight to stoke credit growth is in no way an equity-friendly story”.
Still, he said “the tone in Asia has generally been downbeat”.
The Federal Reserve’s cautious stance on further rate increases has raised doubts about the global economy and led to the Japanese yen’s sharp rise against the dollar, which has pummeled expectations for the competitiveness of Japanese exporters and hurt Japanese stocks.
After a move to negative rates largely failed to assuage anxieties last month, Japan stepped up its response, with Finance Minister Taro Aso saying regulators will respond to market volatility if necessary. Mainland China markets are closed all week.
In October of the same year, the finance ministry is believed to have once forayed into the markets, prior to the BOJ unleashing its huge massive monetary expansion, which saw the yen fall from a record high of 75.30 against the greenback and help give the nation’s battered export sector some respite and help facilitate the burgeoning costs of importing fossil fuels.
The yen and government bonds tend to appreciate in times of economic uncertainty.
Shares in Japan stumbled Wednesday, as investors were concerned about the future course of the U.S.’s interest-rate policy and the health of global banks, while Australia’s benchmark index fell into a bear market.
Investors are concerned that the yen has appreciated too much against the USA dollar despite the Bank of Japan moving to negative interest rates. There is no sign that Japan’s share prices will bottom out as unrest in financial markets has not subsided. But oil staged a recovery after USA prices settled down 4.5% at $26.21 a barrel overnight. The stock climbed $1.97 to $24.49.
Europe’s banks are most at risk as they are already suffering from weak profitability, high shares of non-performing loans (particularly in southern Europe) and are under significant pressure to raise more capital.
“There are mounting concerns about the ability of central banks to continue to prop up asset prices”, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
On Thursday, the Dow Jones Industrial Average declined 255 points, or 1.6%, to 15660.
In Australia, the ASX lost 1.2% to close at 4,775.70, adding to Tuesday’s decline of 2.8%. Its surprise easing in October 2014 has had a more sustained impact, helping drive the currency to a 13-year low of 125.86 on June 5, 2015.
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Investors sought safety, with USA government bonds, the yen and gold surging.
