Nikkei Falls 0.86% as Iran War Fears Drive Oil Surge, Tech Stocks
The Nikkei 225 declined 0.86% to close at ¥36,460 on Thursday as escalating geopolitical tensions in the Middle East overshadowed positive earnings from US tech giants and drove a sharp rally in oil prices.
The broader TOPIX index mirrored the weakness as investors grappled with mounting stagflation risks amid reports that Iran’s conflict has entered its third month. Brent crude surged 7% after Reuters reported the US is considering new military options to break the Iran deadlock, with a military commander set to brief former President Trump on potential strategies.
Without available USD/JPY data, currency impacts on Japan’s export-heavy market remained unclear, though the geopolitical uncertainty typically drives safe-haven flows that could strengthen the yen and pressure exporter margins.
The session’s narrative was dominated by risk-off sentiment despite Amazon’s cloud unit reporting impressive 28% sales growth that topped estimates overnight. SoftBank Group bucked the trend, rising 1.59% to ¥2,528 as investors likely viewed the conglomerate’s tech exposure as beneficial amid the AI boom. Orix also gained 0.37% to ¥5,155.54, providing some defensive stability.
However, Japan’s industrial heavyweights bore the brunt of selling pressure. Fanuc led declines with a 1.63% drop to ¥3,341.7, while Sony Group fell 0.95% to ¥3,125.24 despite the positive tech earnings backdrop from the US. Auto giants Toyota Motor and Honda Motor declined 0.89% and 0.83% respectively, reflecting concerns about supply chain disruptions and higher energy costs. Kyocera rounded out the major losers, down 0.83% to ¥2,633.86.
The Bank of Japan’s recent meeting on April 28 maintained current rates as expected, with Governor Ueda’s dovish tone amid US-China tariff uncertainty continuing to weigh on market sentiment. Investors remain focused on the central bank’s cautious approach to policy normalization, particularly as global economic headwinds intensify.
Thursday’s session highlighted the delicate balance facing Japanese equities as they navigate between positive corporate earnings momentum and escalating geopolitical risks. The oil price surge adds another layer of complexity for Japan’s energy-import dependent economy, potentially reigniting inflation concerns just as the BOJ maintains its accommodative stance. With Iran-related tensions showing no signs of abating and military options reportedly under consideration, Japanese markets may face continued volatility as investors weigh growth prospects against mounting geopolitical and economic uncertainties.
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