Nikkei Under Pressure Again; Oil Emerges as a Threat!

The Japanese stock market began trading on Monday (October 26, 2026) on a weak note. The Nikkei 225 index opened down 243.20 points, or approximately 0.39%, at 62,449.96—marking its third consecutive session of decline. Selling pressure emerged as investors closely monitored a surge in global oil prices, geopolitical tensions in the Middle East, and concerns regarding the outlook for U.S. interest rates.

Negative sentiment spilled over from Wall Street, which closed lower last Friday. The Dow Jones Industrial Average shed 652.82 points, while the Nasdaq fell 53.52 points. Rising oil prices—driven by supply disruptions in the Middle East—have fueled concerns about global inflation. This environment has prompted greater caution among investors, as high energy costs could squeeze corporate profits and slow economic growth.

Several major Japanese stocks faced pressure in early trading. Shares of Advantest, Recruit Holdings, and Tokyo Electron trended lower, while companies such as Kioxia Holdings, Mitsubishi UFJ, and Fanuc saw gains. By sector, services, retail, and air transport were among those hit hardest. This mixed performance suggests that selling activity remains concentrated within specific sectors.

Beyond oil prices, investors are also focused on developments in the conflict involving the United States and Iran. Although Brent crude has retreated from a six-month high, the risk of energy supply disruptions remains elevated. For Japan—a nation heavily reliant on energy imports—rising oil prices threaten to inflate production costs and erode consumer purchasing power. Such uncertainty is a key reason why market participants remain hesitant to aggressively increase their equity positions. Looking ahead, the Nikkei’s movement is expected to remain influenced by oil price trends, the performance of technology stocks, and the Federal Reserve’s interest rate decision on October 27–28. Investors will also be closely monitoring the financial reports of global technology companies to gauge the sustainability of growth in the artificial intelligence sector. Should pressure from energy prices and concerns regarding interest rates persist, the Nikkei risks further decline. Conversely, an easing of tensions in the Middle East and an improvement in Wall Street sentiment could pave the way for a recovery.