Japan's Nikkei index falls more than 5% as fears of an economic slowdown due to rising oil escalate.
Key Takeaways
- Nikkei fell 5.2% to 52,728.72, lowest close since February 2
- Topix dropped 3.8% to 3,575.84 amid a broad sell-off
- Rising oil prices sparked inflation and slowdown fears; Nikkei futures dropped up to 7.8%
Japan market sell-off
Japan's Nikkei index fell more than 5% to 52,728.72 points on Monday, its lowest closing level since February 2, as a broad sell-off took hold amid fears that rising oil prices will drive inflation and an economic slowdown.
“Japan's Nikkei index fell more than 5% to its lowest level in a month on Monday amid a broad sell-off, as rising oil prices fueled fears of inflation and an economic slowdown”
The broader Topix index fell 3.8% to 3,575.84 points, and Nikkei futures plunged as much as 7.8% during the session, approaching a level that would have triggered a trading halt.
Just two weeks earlier both the Nikkei and Topix had reached record highs supported by expectations of profit growth, a stimulus package launched by Prime Minister سناء تاكايتشي, and an AI-driven surge.
Oil markets and Iran succession
Oil concerns and the escalation of regional conflict were central to the market rout.
Oil prices rose more than 25% on Monday to their highest levels since mid-2022 after some major producers cut supplies and worries about prolonged shipping disruptions intensified amid an escalation of the US-Israeli war with Iran.
The article reports that the US-Israeli-Iran war, which began a week earlier, pushed oil above $100 a barrel.
It also notes that on Monday Iran appointed مجتبى خامنئي as successor to his father علي خامنئي as Supreme Leader, a move the article says signals that hardliners remain in power.
هيتوشي أساوكا, chief strategist at asset manager وان, said the market has begun to take the impact of the conflict in the Middle East seriously, adding that investors' prior optimism has given way to doubt and that the current pace of the Nikkei's decline would be justified if the conflict is prolonged.
Tokyo market sell-off
The sell-off hit sectors across the Tokyo Stock Exchange: chipmakers أدفانتست and طوكيو إلكترون fell 11.03% and 6.87% respectively.
“Japan's Nikkei index fell more than 5% to its lowest level in a month on Monday amid a broad sell-off, as rising oil prices fueled fears of inflation and an economic slowdown”
Bank stocks including مجموعة ميتسوبيشي يو إف جيه المالية and مجموعة سوميتومو ميتسوي المالية dropped more than 3%, and all 33 subindices declined.
The nonferrous metals sector was the worst-performing, down 8.38%.
شويتشي أريساوا, general manager of investment research at إيواي كوزمو للأوراق المالية, said the market is concerned about the negative impact of rising oil prices on corporate profits.