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Japan's stock market closed at its lowest point in 26 months yesterday, and Australia's markets tumbled on opening this morning following overnight losses on Wall Street.
Japanese stocks have continued to fall today amid growing concern about a US recession and a deepening global credit crisis.
In Australia, the markets have now fallen for eight days in a row, the worst performance of the Australian stockmarket in seven years.
The stronger yen is likely to hurt shares of exporters, and high-tech stocks are expected to suffer after chip giant Intel Corp missed Wall Street estimates.
One of the stocks in the spotlight is Mizuho Financial Group. Japan's second-biggest bank said on Tuesday its core banking unit would buy $1.2 billion worth of the $6.6 billion in stock being raised by Merrill Lynch.
Exporters such as Honda Motor Co Ltd and Sony Corp led a broad sell-off after the dollar fell to a 2-1/2-year low below 106.60 yen early in the morning.
"The market is likely to test the downside, with a broad range of shares being sold," said Kazuhiro Takahashi, general manager of equity marketing at Daiwa Securities SMBC.
Still, the market pared some of its losses in the minutes before the end of the morning session, with the benchmark Nikkei ending the morning down 0.9 percent at 13,841.93 after falling as low as 13,594.32, its lowest since Oct. 31, 2005.
The broader TOPIX index was down 1.3 percent at 1,333.03. The TOPIX fell more than 3 percent at one point.
Elsewhere in Asia, Hong Kong blue chips fell 4.2 percent and China plays slid 4.8 percent on Wednesday as worries about a possible US recession and higher-than-expected losses at banks drove investors to dump shares across the board.
The benchmark Hang Seng Index was at 24,748.12 at
0255 GMT.
The Australian share market opened heavily in the red as US stocks plunged overnight on the back of a record quarterly loss at US bank Citigroup Inc, a poor performance by computer chip maker, Intel, and a surprise drop in US December retail sales.
At 1015 AEDT, the benchmark S&P/ASX200 index was down 166 points or 2.79 per cent at 5,793.8 while the All Ordinaries had tumbled 157 points or 2.67 per cent to 5,862.9.
On the Sydney Futures Exchange at 1015 AEDT, the March share price index was down 134 points to 5,817 on a volume of 5,958 contracts.
Private client adviser at ABN Amro Morgans, Trent Muller, said the Australian market was reacting to the negative outlook in the US and lower commodities.
"The fallout from the Citigroup result is significant with many saying it is not a 'kitchen sink' result and that there is more bad news to come," Mr Muller said.
"The performance of metal prices has also not helped with some off by as much as four per cent."
Mr Muller said that local indicators would have little effect on the market.
"I don't think anything happening here will influence the broader market but we will see a bit of panic selling with a lot of investors taking cash off the table today."
Australian data due for release today include housing finance figures for November from the Australian Bureau of Statistics, along with the Westpac/Melbourne Institute index of consumer confidence for January, and the DEWR leading indicator of employment for January.
At 1020 AEDT, shares in Rio Tinto Ltd, which is due to make its fourth quarter production report today, had fallen by $3.98 to 122.72. BHP Billiton was down $1.43 to $37.66.
At 1025 AEDT, the price of spot gold in Sydney was US$889.50 per fine ounce, US$19.95 down from its Tuesday close at US$909.45.
Goldminers followed suit with Lihir 18 cents lower at $3.81, Newmont Mining losing a cent to $6.21 and Newcrest mining down $1.45 to $37.40.
In New York overnight, February crude closed down US$1.02 at US$92.69 per barrel.
At 1030 AEDT, Australian energy stocks were down with Oil Search ten cents lower at $4.62, Santos losing 45 cents to $13.95 and Woodside Petroleum shedding 75 cents to $49.30.
The banks were big losers, too, with ANZ Bank down 26 cents to $25.83, Commonwealth Bank dropping $1.25 to $53.70 and National Australia Bank down 80 cents to $35.00. Westpac was down 35 cents to $25.47.
- AAP, REUTERS
