Asian markets sharply lower as Switzerland's surprise currency move stuns markets

Asian stocks were sharply lower Friday after a surprise move by the Swiss National Bank to abandon its efforts to keep its currency artificially cheap shocked the market.

KEEPING SCORE: Japan's Nikkei 225 dropped 2.5 percent to 16,680.24 while South Korea's Kospi fell 1.4 percent to 1,887.10. Hong Kong's Hang Seng index was down 1 percent to 24,107.56. Australia's S&P/ASX 200 declined 0.8 percent to 5,288.10. Stocks in Singapore, New Zealand and Taiwan also fell.

SWISS SHOCK: The Swiss National Bank, or SNB, said early morning on Thursday that it decided to ditch an increasingly expensive policy to cap the rise of the Swiss franc. After the announcement, the Swiss franc spiked against the euro and the dollar while Swiss stocks tanked. The SNB had prevented the euro from trading below 1.20 francs. But the cost for retaining the policy for the central bank by buying euros or selling francs has risen as the outlook for the euro darkened.

ANALYST'S TAKE: "At least for the short term the Swiss Bank action has opened up a new front of financial markets risk," said Ric Spooner, chief market analyst at CMC Markets. "The Swiss Bank's move last night is a reminder to investors and traders that Central Bank action is a source of market risk given the scale of their activities in recent years and its impact on economic activity."

BROKERS BROKE: Global Brokers NZ Ltd., a small currency trading house in New Zealand, was among the first to say that it was closing its doors as the global economy felt the fallouts from the Swiss National Bank's abrupt policy reversal. Global Brokers Director David Johnson said in an announcement on the website of Excel Markets, its affiliate, that the trading house sustained a total loss of operational capital and it can no longer meet the regulatory minimum to continue business. The majority of clients in a franc position sustained losses amounting to far greater than their account equity, he said.

WALL STREET: On Thursday, U.S. stock markets were weighed down by weak quarterly financial results from Bank of America and Citigroup. The Standard & Poor's 500 index fell 0.9 percent to close at 1,992.67. The Dow Jones industrial average dropped 0.6 percent to 17,320.71, while the Nasdaq composite fell 1.5 percent to 4,570.82.

OIL: The benchmark U.S. crude futures contract was up 36 cents to$46.61 a barrel in electronic NYMEX trading. The contract tumbled $2.23 to settle at $46.25 in New York on Thursday. Brent crude, a benchmark for international oils, rose 29 cents at $48.56 a barrel in London.

CURRENCIES: The dollar edged up to 116.328 yen from 116.207 yen while the euro rose to $1.1632 from $1.1619.