Nikkei Slips 0.4% as Geopolitical Tensions Weigh on Markets
The Nikkei 225 declined 0.42% to ¥39,270 on Thursday as escalating Middle East tensions and concerns over global energy supply chains weighed on investor sentiment across Tokyo markets.
Yen Weakness Fails to Lift Exporters
Despite the USD/JPY holding near multi-decade highs at ¥162.16, traditional export beneficiaries struggled to capitalize on the weak yen environment. Honda Motor fell 0.71% to ¥4,521.53, while Sony Group dropped 0.43% to ¥3,357.51. The persistent yen weakness, which typically boosts overseas earnings when repatriated, was overshadowed by broader risk-off sentiment as traders focused on geopolitical developments in the Strait of Hormuz.
Financial Stocks Buck Downward Trend
Japan’s major financial institutions emerged as the session’s standout performers, with all three megabanks posting solid gains. Mitsubishi UFJ Financial led the charge with a 1.20% advance to ¥3,691.47, followed by Sumitomo Mitsui Financial (+0.91%) and Mizuho Financial (+0.85%). The banking sector’s resilience likely reflects expectations that prolonged yen weakness could eventually prompt Bank of Japan intervention or policy adjustments, potentially benefiting net interest margins. Orix also joined the winners’ circle, climbing 0.94% to ¥6,580.45.
Technology and growth stocks faced headwinds, with SoftBank Group declining 1.15% to ¥3,068.93 as its Vision Fund portfolio companies remain vulnerable to global risk sentiment. Nintendo also retreated 0.92% to ¥1,739.55, reflecting broader tech sector weakness amid uncertainty over consumer spending patterns.
Energy Concerns Drive Risk-Off Sentiment
The session’s cautious tone stemmed largely from escalating tensions in the Middle East, where continued US-Iran strikes have disrupted shipping through the critical Strait of Hormuz. Reports that some vessels are refusing US military-guided transits through the waterway have raised concerns about global energy supply chains, even as oil prices turned lower during the session. For Japan, which imports virtually all of its energy needs, any prolonged disruption to Middle Eastern oil flows could pose significant economic challenges.
With the next Bank of Japan meeting still months away on April 28, 2026, markets remain focused on Governor Ueda’s messaging around potential policy shifts. Current expectations favor a hold at existing rates, though any hawkish surprises could provide yen support. For now, Japanese equities continue navigating between the benefits of export competitiveness and the headwinds of global uncertainty, with Thursday’s mixed performance reflecting this delicate balance.
This article is for informational purposes only and does not constitute investment advice. Always consult with a qualified financial advisor before making investment decisions.