Spread of US financial crisis to Asia

The MSCI Asia Pacific index erased all of its gains for the year on Tuesday as bank stocks continued declines triggered by the collapse of a growing number of US financial establishments. The Tokyo Stock Price Index (Topix) fell almost 3%, representing the biggest daily decline in more than five months, while the MSCI ASEAN Index slumped 9.8% from a January high. The MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.47%, also reaching new lows for the year. Asian stocks are reacting to growing risks of a US recession happening earlier than previously expected, with cyclical markets such as Korea, Japan, and cyclical sectors and small caps more impacted in this context. Bank stocks in Japan fell sharply on Tuesday, with Mitsubishi UFJ Financial Group facing an 8.59% decline. Investors continued to unload bank stocks on fears of a spillover effect from the collapse of three US lenders, even after regulators announced emergency measures to protect depositors.