Japan Is Getting Crushed As Yen Surges

Japan's Nikkei is down 1.8 percent.

Korea's Kospi is down 0.8 percent.

Australia's S&P/ASX is down 1.3 percent.

This is coming as Japan's yen surges against the euro.

On Monday, Italy wrapped up its general election. The initial exit polls showed that Pier Luigi Bersani won big, which is what the market wanted. With Bersani came the expectation that Italy's ongoing reforms to manage its massive debt load would continue.

However, as more votes were counted, it became apparent that the race was actually much closer than expected with Silvio Berlusconi and his party getting much more voter support than anyone expected. At this point, it's looking like gridlock with no clear winner.

"Berlusconi getting traction puts some of Monti's austerity measures and moves at risk," said Stifel Nicolaus' Dave Lutz. "This reverses the confidence the capital markets have in Italy debt."

As these headlines rolled out, the euro tanked against the yen.

Today's sell-off in Japan is erasing yesterday's massive gain.