Nikkei Falls 0.6% as SoftBank Tumbles Amid Middle East Tensions
The Nikkei 225 declined 0.63% to close at ¥38,976 on Monday as geopolitical tensions in the Middle East weighed on investor sentiment, though a weaker yen provided support for major exporters in an otherwise choppy session.
Yen Weakness Lifts Auto Giants Despite Broader Decline
The USD/JPY pair strengthened to ¥161.77, marking fresh multi-decade highs that provided a tailwind for Japan’s export-heavy manufacturers. Toyota Motor surged 2.99% to ¥27,743.75, leading the Nikkei’s gainers, while Honda Motor climbed 2.64% to ¥4,340.83. The weaker yen enhances the competitiveness of Japanese automakers in overseas markets and boosts the value of their foreign earnings when converted back to yen.
Sony Group also benefited from the currency backdrop, rising 2.02% to ¥3,188.88, as investors positioned ahead of the company’s upcoming quarterly earnings. The technology and entertainment conglomerate has significant exposure to dollar-denominated revenues from its gaming and entertainment divisions.
SoftBank Leads Tech Selloff Amid AI Sector Doubts
SoftBank Group emerged as the session’s biggest loser, plummeting 5.60% to ¥3,188.88 as broader doubts about artificial intelligence valuations rippled through global markets. The tech investor’s heavy exposure to AI-related investments through its Vision Fund made it particularly vulnerable to the sector rotation away from high-growth technology names.
Other technology stocks also faced pressure, with Nintendo declining 1.74% to ¥1,648.64 and industrial robotics leader Fanuc falling 1.13% to ¥3,543.20. The tech selloff reflected concerns that recent AI-driven rallies may have outpaced fundamental developments in the sector.
Middle East Tensions Cloud Regional Outlook
Asian markets traded in mixed fashion as escalating tensions between Iran and Israel created uncertainty across risk assets. Reports of increased Iranian cyberattacks and fresh strikes in the region prompted investors to adopt a more cautious stance, with safe-haven flows supporting the Japanese yen despite the Bank of Japan’s ultra-loose monetary policy.
The geopolitical backdrop also supported defensive sectors, with Takeda Pharmaceutical gaining 1.66% to ¥2,574.08 and Mizuho Financial Group rising 1.25% to ¥1,570.98 as investors sought stability in healthcare and financial services.
BOJ Policy Outlook Remains in Focus
With the next Bank of Japan meeting scheduled for April 28, 2026, market participants continue to monitor Governor Ueda’s communications for signals about potential policy adjustments. Current expectations favor a hold at the existing rate, though any shift in tone regarding US-China trade tensions or domestic inflation could influence the yen’s trajectory. A dovish stance would likely weaken the yen further, while hawkish surprises could provide support for the currency.
Monday’s session highlighted the ongoing tug-of-war between geopolitical uncertainties and currency-driven export strength that continues to define Japanese equity markets. While the weaker yen provides fundamental support for the country’s manufacturers, global risk sentiment remains the key driver for broader market direction in the near term.
This article is for informational purposes only and does not constitute investment advice. Past performance does not guarantee future results. Investors should conduct their own research and consider their risk tolerance before making investment decisions.