Japanese Stocks Slip, Hormuz Risks and Oil Spike Trigger Risk-Off
Japanese stocks weakened in early trading on Monday after US President Donald Trump's threat of attacks on power plants around the Strait of Hormuz heightened market concerns over surging oil prices. Sentiment turned increasingly defensive as investors assessed that energy disruptions could persist and increase the risk of global inflation.
The Nikkei 225 index fell as much as 3.1%, while the Topix index fell 2.7%. This decline also reflected a catch-up effect after the Tokyo stock market was closed on Friday, allowing prices to adjust more quickly to global market movements.
The sectors weighing most heavily on the Topix were electronics and banking, two groups sensitive to changes in growth expectations and interest rates. On the Nikkei, Nissan Motor and IHI Corp. were among the biggest decliners, as investors reduced exposure to cyclical and riskier stocks.
The oil surge was the main driver of risk-off across sectors. Brent was hovering around US$112 per barrel in Tokyo morning, amplifying concerns about energy costs and corporate margins, while also dampening risk appetite in equity markets.
Tokai Tokyo Intelligence strategist Shoji Hirakawa said the market is increasingly confident that the Iran war will last a long time, making macroeconomic-sensitive sectors—including technology—vulnerable to selling pressure. He added that if oil rises to US$130 per barrel, the likelihood of a US interest rate hike could increase, which would pose an additional drag on Japanese stocks.
However, Hirakawa believes some downside risks are already starting to be reflected in prices, so there is still a chance for a rebound if energy volatility subsides or the market receives signs of stabilization. The next direction will be largely determined by developments in Hormuz, the path of oil prices, and changes in global interest rate expectations.
Source: Newsmaker.id
