Nervousness Prevails In Global Markets as Japan Crashes over 5%

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Asian stock markets traded heavily down as concerns over the health of European banks kept markets nervous across the globe. Investors rushed to safe haven assets, which sent yields on Japanese bonds to below zero for the first time while the yen soared to a 15-month high.

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Asian indices in red

Japan’s Nikkei 225 nosedived by as much as 5.40% to 16,085 while Australia’s ASX fell 2.78% to 4,882.60. Mumbai Sensex was seen trading nearly 1% down at 24,061 as most of the Asian markets including China remained closed on account of the Lunar New Year. The weakness in Asian markets may be stemming from Europe, where there are mounting concerns over the health of European banks.

Deutsche Bank’s (NYSE:DB) comments yesterday disrupted market movement as the bank said that it has sufficient reserves to honour bond payments until the end of this year. Negative interest rates in Japan, and extremely low rates in Europe and the U.S. have given rise to fears that bank margins will face the brunt, affecting credit quality. Major European indices are mixed today with Euronext 100 down by 0.05% to 803, Dax lower by 0.27% to 8,955 and the Swiss Market Index reporting a loss of 0.32% at 7,734. FTSE 100 by contrast was up by 0.48% to 5,717 and CAC 40 added up 0.03% to 4,067 during the late Asian hours.

Euro crisis

Meanwhile, lacklustre industrial production in Germany has also impacted market sentiment today. The region’s industrial output fell by 1.2% in December, which was opposite expectations of 0.4% growth. A report from the International Energy Agency (IEA) is also uninspiring as it said that there is no hint of recovery in oil prices as supplies are set to pile up even more.

It remains to be seen how U.S. markets will react to the new developments as they traded in the negative territory a day earlier. The Dow Jones Industrial Average fell by 1.10% to 16,027.05 while the S&P 500 erased as much as 1.42% to 1,853.44 after a late day recovery.

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