Japanese stocks set to drop the most in 11 months this week on Middle East conflict
The Japanese stock market suffered its steepest weekly?drop since almost a full year on Friday as?the Middle East conflict? severely disrupted oil traffic through the Strait of Hormuz. This?crippled supply? and pushed investors away from?risk? to cash.
After falling as high as 1.4% in the previous session, the Nikkei Index closed at 55,620.84. The benchmark closed the week down 5.5%, which is its biggest weekly drop by percentage since the end of April 2025 when U.S. president Donald Trump announced the sweeping tariffs.
The Topix index as a whole rose 0.4%, to?3,716.93 but ended the week down 5.6%.
The rise in crude oil is (the markets') greatest concern, said Shota Sando. He is an equity market analyst with Tokai Tokyo Intelligence Laboratory.
If it is clear that oil prices won't be heading toward the $100 per barrel level that has been cited so often, this would likely bring a sigh of relief and help stabilize sentiment.
The Bank of Japan is forced to tighten its policy as rising oil prices feed Japan's import-dependent economy, which in turn weighs on the yen.
Brent crude futures fell 0.26% on Friday to $85.14 a barrel at 0705 GMT. This is near the 20-month high reached on Thursday of $86.28 per barrel.
Energy explorers index, which fell 1.9%, was the worst performing of 33 sub-indices on the Tokyo Stock Exchange. Inpex dropped 1.7%, while Japan Petroleum Exploration fell 2.6%. The oil sector fell 1.2%.
Nikkei's best performers were software and IT related shares, which mirrored the U.S. market overnight. Fujitsu gained 5.4%, while NEC rose by 5.2%.
Separately Rohm was "untraded" and pin at the daily maximum limit after Nikkei reported that auto-parts giant Denso proposed to acquire?the chipmaker? in a deal?that?could?be worth up to?about $8.3 billion?
Denso ended the day 3.6% lower than it started, after falling as high as 5.6%.
The Nikkei Index saw 135 gainers and 89 decliners. (Reporting and editing by Satoshi Sugiyama, Christopher Cushing, Sherry Jacob Phillips and Sumana Sandy)
(source: Reuters)
