Monday, the stock markets across the Asia-Pacific region extended losses from Friday to close sharply lower on fears that the latest moves by central banks and governments would not be enough to stave off a global recession. The Japanese stock market closed at a 26-year low, while the Australian market ended at a fresh four-year low. Shares in Hong Kong closed at their lowest level since mid-2004 and Chinese stocks closed at their lowest level in more than two years. Bucking the trend, the South Korean market closed slightly higher. Markets in Singapore, Malaysia and New Zealand were closed on Monday on account of public holidays.
The U.S. stocks closed more than 3% lower on Friday, with all the three major averages setting new five-year closing lows. The decline came as investors reacted to a panic fueled by overall weakness in the global markets combined with falling commodity prices.
Crude oil closed at a 16-month low on Friday as traders bet demand will continue to slide despite a cut in production by the Organization of Petroleum Exporting Countries, or OPEC. Light sweet crude ended at $64.15 on the New York Mercantile Exchange, down $3.69 on the session. In late Asian trades Monday, crude oil was trading at $62.11, down $2.04 or 3.18%.
The Japanese stock market closed at a 26-year low on Monday as a strong yen battered exporters and on disappointment that the government failed to announce aggressive measures to tackle the economic slowdown. In early trading, the stocks rose briefly on short-covering.
The benchmark Nikkei 225 Index shed 486.18 points or 6.4% to close at 7,162.90, its lowest level since October 1982. The broader Topix Index of all First Section Issues lost 56.95 points or 7.4% to settle at 746.46.
Shortly after the markets closed, the Japanese Prime Minister Taro Aso said that the government will expand its bank bailout scheme to ease the strains on banks and strengthen rules on short-selling of stocks.
Earlier in the day, Japan's finance minister Shoichi Nakagawa said that the government was closely watching the foreign exchange market and added that excessive currency moves were bad for the economy and financial markets, indicating that the government was growing concerned about the pace of the yen gains. However, the government offered no large-scale measures to shore up the economy. Meanwhile, the Group of Seven industrialized nations warned that a surging yen posed a threat to the global financial and economic stability.
On the economic front, the Bank of Japan said on Monday that corporate service prices inched up 0.1% on year in September, marking the slowest rise since January 1985. That was well below analyst expectations that called for an annual increase of 1.2%, and it was also sharply lower than the 1.4% increase in August. Advertising prices were the biggest decliner, falling 4.5%, while transportation stocks made the largest jump at 1.6%.
In the currency market, the U.S. dollar fell to the upper 92 yen-level late Monday following the plunge in the Nikkei Index and despite the warning from the G7 industrialized nations. In late trades, the dollar was quoted in a range of 92.95-92.98 yen, down 2.19 yen from Friday's close of 95.14-95.17 yen in Tokyo.
Banking stocks closed sharply lower following reports that they are considering plans to boost their capital. Mitsubishi UFJ is reportedly considering raising up to 1 trillion yen to replenish its capital. Media reports also said that Mizuho Financial and Sumitomo Mitsui were looking to raise capital. Mitsubishi UFJ fell 14.6%, Mizuho Financial shed 14.8% and Sumitomo Mitsui Financial dropped 11.5%.
Among exporters, Sony dropped 7%, Toyota dipped 8.1%, Honda dropped 8.9% and Canon fell 10.9%. After the market closed, Canon reported a 26% drop in its quarterly operating profit and slashed its annual outlook.
The South Korean stock market closed slightly higher in a volatile trading session as selling by nervous investors offset an initial boost from the central bank's emergency rate cut. The benchmark Korea Composite Stock Price Index, or KOSPI, added 7.7 points or 0.82% to settle at 946.65, ending a four-day losing streak. The index had fallen nearly 5% in the afternoon to below 900 points for the first time in more than three years.
The Bank of Korea slashed interest rates by 75 basis points to 4.25% from 5.00% in an emergency meeting on Monday morning to help the struggling economy and the plummeting stock market. The rate cut was the second by the central bank in the month and comes after the country's GDP grew 0.6% in the third quarter, marking the slowest growth in four years. Before raising rates in August to combat inflation, the board had left interest rates at 5.00% for eleven straight meetings.
The South Korean President Lee Myung-bak said in a budget speech to parliament that the country is capable of overcoming the ongoing financial crisis through a combination of appropriate policy measures, including tax cuts, deregulation, fiscal spending increase, and sufficient supplies of foreign and local currencies. He added that the government would continue to supply liquidity into the financial markets until the uncertainty eased.
In the currency market, the South Korean won closed lower against the U.S. dollar following the rate cut. The won closed at 1442.5 won to the US dollar, down 18.5 won from Friday's close.
Banking stocks rallied following the rate cut. Shinhan Financial climbed 5.42% and Woori Finance rose 11.6%. However, shipbuilders and brokerage companies closed lower. Samsung Heavy Industries shed 14.75% and Samsung Securities slid 5.11%.
Among the tech stocks, market heavyweight Samsung Electronics rose 7.48% and LG Electronics surged 6.52%. Top steelmaker POSCO gained 8.68% and Hyundai Motor closed up 10.49%.
The Australian stock market closed at a new four-year low on Monday on renewed fears of a global recession. The benchmark S&P/ASX 200 Index closed down 60.2 points, or 1.56%, at 3809.2 and the broader All Ordinaries Index declined 63.3 points, or 1.65%, to settle at 3768.30.
On the economic front, the markets had very little economic reports to digest in today's trading.
In the currency market, the Australian dollar closed 4.2% lower against the U.S. dollar. The local currency closed trading at US$0.6123, down from Friday's close of US$0.6391.
In the mining space, BHP Billiton gained 0.9% and Rio Tinto advanced 0.86%. Gold miner Newcrest Mining rose 2.58%, Newmont Mining climbed 7.39% and Lihir Gold gained 2.61%.
However, the banking stocks closed weaker. ANZ slid 3.13%, Westpac slipped 3.24% and National Australia bank dropped 3.16%. NIB Holdings, the only listed health insurer in Australia, rejected an unsolicited takeover offer that valued the company at up to A$621.4 million. The company's stock jumped 13.9%.
Consolidated Media Holdings, the holder of a 25% stake in Nine Network owner PBL Media, announced the resignation of James Packer from PBL Media group's board. The company's stock advanced.
In the oil sector, Woodside Petroleum fell 5.89% and Oil Search dropped 8.7%, while Santos advanced 1.64%.
Other Asian markets:
Hong Kong's Hang Seng Index fell 1,602.54 points or 12.70% to close at 11,015.84, China's Shanghai Composite Index slid 116.27 points or 6.32% to finish at 1723.35, Taiwan's weighted index dropped 212.75 points or 4.65% to close at 4366.87 and Indonesia's Jakarta Composite Index closed down 78.46 points or 6.30% at 1,166.41.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.