Asia stocks tumble on China liquidity woes; Nikkei down 2.5%

Investing.com - Asian stock markets were sharply lower on Monday, as a steep selloff in U.S. equities on Friday and ongoing turmoil in emerging markets continued to weigh on appetite for riskier assets.

During late Asian trade, Hong Kong's Hang Seng Index tumbled 2%, China’s Shanghai Composite index declined 1%, Australia’s ASX/200 Index closed 0.42% lower, while Japan’s Nikkei 225 Index ended down 2.51%.

Asia was given a negative lead from the U.S., where the Dow plunged 318 points on Friday.

In Tokyo, the Nikkei tumbled to the lowest level since November 14 as traders continued to monitor movements in the currency market.

USD/JPY fell to a daily low of 101.75, moving off the previous session’s high of 103.57. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.

Automakers Toyota and Mazda saw shares fall 2.1% and 2.7% respectively, Sharp dropped 3.5%, while index heavyweights Fast Retailing and Fanuc retreated 1.6% and 2.6%.

Japanese megabanks were also lower with shares of the nation’s largest lender Mitsubishi UFJ Financial Group slumping 3.5%, while Sumitomo Mitsui Financial Group and Nomura Holdings fell 3% and 3.6% respectively.

Elsewhere, in Hong Kong, the Hang Seng fell to the weakest level since September 2 as shares in the financial sector came under pressure amid ongoing concerns over tightening liquidity conditions in the financial system and rising interbank lending rates.

Investors have remained cautious over the level of bad debt at Chinese banks, particularly when interbank lending rates are high.

China Construction Bank lost 1.7%, Industrial and Commercial Bank of China dropped 1.1%, while China Minsheng Bank and China Citic Bank retreated 2.3% and 2.4% respectively.

Meanwhile, in Australia, the ASX/200 Index fell to a five-week low as losses in the financial and mining sectors weighed on the benchmark index.

Commonwealth Banking Group retreated 0.5%, while Australia and New Zealand Banking, National Australia Bank and Westpac Banking all declined 1% apiece.

Looking ahead, European stock market futures pointed to a mixed open. The EURO STOXX 50 futures pointed to a gain of 0.1% at the open, France’s CAC 40 futures shed 0.1%, London’s FTSE 100 futures indicated a decline of 0.6%, while Germany's DAX futures pointed to a drop of 0.1%.

Across the Atlantic, U.S. equity markets pointed to a modestly higher open. The Dow Jones Industrial Average futures pointed to a gain of 0.2%, S&P 500 futures inched up 0.25%, while the Nasdaq 100 futures indicated a rise of 0.2%.

The U.S. is to release data on new home sales.