Asia stocks plunge on French, Greek elections; Nikkei drops 2.85%

Investing.com - Asian stock markets dropped sharply on Monday, as investors cut their exposure to riskier assets amid concerns over the impact of weekend elections in France and Greece on the euro zone’s ongoing debt crisis.

During late Asian trade, Hong Kong's Hang Seng Index plummeted 2.85%, Australia’s ASX/200 Index tumbled 2.2%, while Japan’s Nikkei 225 Index plunged 2.85%.

Market sentiment was rattled after Socialist challenger Francois Hollande defeated French President Nicolas Sarkozy and pro-bailout Greek parties took a drubbing according to exit polls in from Sunday's parliamentary elections.

The weekend election results triggered fresh uncertainty over Europe's ability to tackle its debt crisis. Hollande has called for a re-negotiation of Europe’s fiscal compact and its tough budget rules.

Adding to the gloomy trade environment was a much weaker-than-expected U.S. jobs report on Friday, which added to uncertainty over the strength of the U.S. economic recovery.

Shares in Japan, which were closed since May 2, plunged to the lowest level since February 15, as exporters and lenders came under heavy selling pressure as the yen strengthened broadly.

Shares in consumer electronics giant Sony dropped 4.5%, digital camera maker Canon slumped 1.95%, while automakers Honda and Nissan tumbled 5.6% and 5.2% respectively.

Financial sector stocks were lower, with Mitsubishi UFJ Financial Group dropping 3.2%, Sumitomo Mitsui Financial Group falling 2.85% and investment bank Nomura Holdings plummeting 7.35%.

Meanwhile, in Hong Kong, shares in raw material producers led losses, tracking oil and metal prices lower amid concerns over the strength of the global economy.

Oil producers CNOOC and PetroChina slumped 4.9% and 3.2% respectively, while shares in Jiangxi Copper Company lost 3.8%.

Lenders and property developers came under pressure, with index heavyweight HSBC Holdings slumping 2.85% and China Construction Bank shares down 2%, while Sino Land and Sun Hung Kai shares dropped 2.95% and 2.8% respectively.

Hong Kong-based exporters with high exposure to Europe further added to losses, with Esprit Holdings dropping 3%, Li & Fung shares tumbling 5.5% and Cosco Pacific plunging 7.5%.

Elsewhere, in Australia, raw material producers were broadly lower, with Rio Tinto shares tumbling 4.6% to hit a four-week low. Shares in rival BHP Billiton slumped 4% and iron ore producer Fortescue Metals Group lost 6%.

Looking ahead, the outlook for European stock markets was sharply lower, after election results on Greece and France fuelled concerns over attempt to resolve Europe’s debt crisis.

The EURO STOXX 50 futures pointed to a decline of 2%, France’s CAC 40 futures indicated a drop 1.6%, Germany's DAX futures lost 2.6%, while London’s FTSE 100 futures declined 1.4%.

Later in the day, the euro zone was to publish a report on investor confidence, while Germany was to publish official data on factory orders.