The yen strengthened by as much as 1.4 per cent to Y114.21. The USD/JPY fell below the Y115 mark, leaving the yen at its highest level since early November 2014. Due to volatility in the markets, investors scurried to the relative safety of haven assets, namely the yen and government bonds.
Growing concerns over the world economy, market volatility and falling oil prices were meted out to banking stocks in the US and Europe overnight. Bank shares on both sides of the Atlantic were pounded on Monday, and the negative sentiment spilled over into Japan and Australia, with most other Asian markets still closed for the Lunar New Year holiday.
On Wall Street the S&P 500 ended the session 1.4 per cent lower, the Dow Jones Industrial Average was down 1.1 per cent and the Nasdaq Composite fell 1.8 per cent.
In Asian trading on Tuesday, Japan’s Nikkei was down 5.5 per cent, and the broader Topix was down 5.5 per cent, with the financial sector losing 6.7 per cent.
Australia’s S&P/ASX 200 ended 2.9 per cent lower, with the heavyweight financial sector off 3.2 per cent. It was the market’s biggest fall since September 29.