Japanese stocks were down sharply Monday, leading declines in the rest of Asia on the yen's surge to a one-and-a-half-year high against the dollar, weak earnings from several big firms, and follow-through selling after the Bank of Japan took no action Thursday.

The Nikkei Stock Average was down 3.7% in late morning. Japanese markets were closed Friday for a national holiday. Australia's ASX 200 was 1.3% lower, New Zealand's NZX-50 was down 0.2%, and South Korea's Kospi was off 0.5%. Many markets in Asia are closed Monday for a holiday, including China, Hong Kong, and Singapore.

The falls in Japanese stocks followed the BOJ's decision to keep its main policy unchanged, despite slowing inflation and expectations for an expansion in its asset-purchase program, particularly in exchange-traded funds. The yen's surge to a one-and-a-half-year high against the dollar is also hitting Japanese exporters.

The dollar was at ¥ 106.48 after falling as low as ¥ 106.14, the lowest since October 2014, according to EBS. The dollar was above ¥ 111.50 before the BOJ outcome.

Over the weekend, the U.S. Treasury Department, in its semiannual currency report to Congress, called out China, Japan, South Korea, Taiwan and Germany for relying on policies it says threaten to damage the U.S. and the global economy. The move, meant to pave the way for a new pan-Pacific trade deal, may discourage the Japanese authorities from directly intervening in the currency market, analysts say.

"Bad news take place all at once," said Katsunori Kitakura, strategist at Sumitomo Mitsui Trust Bank. He said market turbulence around BOJ policy meetings suggests the central bank's communication with markets isn't as smooth as it should be.

He said, though, that market sentiment may improve in the coming weeks if the government takes fiscal stimulus measures in time for Group of Seven summit meetings later this month.

Electronics parts maker Murata Manufacturing Co. is down 14% following its projections for a decline in earnings in the fiscal year that started in April.

The company cited a higher yen, lower product selling prices, increased fixed costs and higher research and development expenses.

Sony Corp. was down 4.3% after the company posted a net loss in the January-March period, weighed down by its device and mobile communication businesses.

In Australia, lackluster earnings from Westpac Banking Corp., one of Australia's biggest banks, weighed heavily on Australia's share market in early trading.

"Westpac's miss on headline expectations has set the tone for a nervous market this morning," CMC Markets chief market analyst Ric Spooner said. He adds that while Westpac's first-half earnings were only marginally below expectations, and there doesn't appear to be anything seriously alarming, investors are concerned it is struggling to control costs. Westpac was down 4.1%.

Robb M. Stewart in Melbourne contributed to this article.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

 

(END) Dow Jones Newswires

May 01, 2016 23:45 ET (03:45 GMT)

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