Nikkei Falls 0.9% as Mideast Tensions Weigh on Risk Sentiment
The Nikkei 225 declined 0.90% to close at ¥37,086 on Monday as escalating Middle East tensions dampened investor appetite for risk assets across Tokyo’s main board.
The broader TOPIX index mirrored the weakness as geopolitical concerns overshadowed corporate fundamentals. The USD/JPY pair held steady around ¥156.89, with the weaker yen providing limited support to export-heavy stocks amid the broader risk-off sentiment.
Monday’s session was dominated by news of tanker attacks near the Strait of Hormuz and ongoing US-Iran tensions, which sent oil prices fluctuating and raised concerns about global supply chain disruptions. While former President Trump’s pledge to assist stranded ships in the strait provided some relief to energy markets, investors remained cautious about the potential for further escalation in the region.
SoftBank Group emerged as the session’s standout performer, surging 4.32% to ¥2,802.13 as investors rotated into technology plays despite the broader market weakness. The conglomerate’s AI-focused investments continued to attract attention from both institutional and retail NISA investors seeking exposure to artificial intelligence themes. Daikin Industries also bucked the trend, gaining 0.85% to ¥2,614.90 on steady demand for its air conditioning systems.
However, the losses were broad-based among Japan’s industrial giants. Kyocera led decliners with a sharp 7.07% drop to ¥2,760.26, while precision machinery maker Fanuc fell 2.35% to ¥3,419.12. Toyota Motor, Japan’s largest automaker, declined 2.03% to ¥29,816.18 as concerns about potential supply chain disruptions weighed on the stock. Financial services firm Orix and electronics giant Sony Group also posted notable declines of 1.67% and 1.54%, respectively.
The Bank of Japan’s next policy meeting, scheduled for April 28, continues to loom over market sentiment. With the central bank expected to maintain its current accommodative stance, investors are closely watching for any shifts in Governor Ueda’s tone regarding future policy normalization. The ongoing US-China trade tensions and Middle East uncertainty are likely to reinforce the BOJ’s cautious approach, potentially keeping the yen under pressure and supporting export competitiveness.
As Tokyo markets navigate the complex interplay of geopolitical risks and monetary policy expectations, the focus remains on how global tensions might impact Japan’s export-dependent economy. With the yen trading near multi-decade lows against the dollar, any escalation in Middle East conflicts could further complicate the BOJ’s policy calculus while presenting both opportunities and challenges for Japanese equities.
This article is for informational purposes only and does not constitute investment advice. Please consult with a qualified financial advisor before making investment decisions.