Japan’s Nikkei Stock Average JP:100000018 -2.56% tumbled 2.1%, South Korea’s Kospi KR:SEU -0.86% lost 0.6%, and Australia’s S&P/ASX 200 index AU:XJO -2.05% fell 1.4%.
Reuters
In Chinese trading, Hong Kong’s Hang Seng Index HK:HSI -2.19% dropped 2.2%, while the Shanghai Composite Index CN:000001 -1.27% gave up a more modest 0.7%.
U.S. index futures also took a hit, as the Dow Jones Industrial Average DJIA -0.17% contract traded 133 points, or 0.9%, Nasdaq COMP -0.30% futures fell 33 points, or 1.2%, while those for the S&P 500 SPX -0.16% lost 19.30 points, or 1.2%.
In the currency markets, the euro EURUSD -0.0323% fell sharply to $1.2908 in Asian trading hours Monday, down from $1.3076 in late North American trading Friday.
The losses for Asian stocks and other securities came after Cyprus announced plans for a one-off levy on bank deposits in exchange for equity in the banks. The measure was part of a deal that would have international creditors provide 10 billion euros ($12.9 billion) to shore up the island nation’s finances.
The move would mark the first time in the euro-zone debt crisis that private citizens’ bank deposits would be tapped, and Morgan Stanley said the introduction of the levy “seems to have broken another taboo.”
The strategists went on to question whether “senior bank debt is the next taboo to be broken, given the linkage with deposits.”
Morgan Stanley recommended selling high-beta banks and said that, broadly, “investors should expect material market weakness in the near term.” (Read more analyst reaction to the Cyprus deposit levy.)
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