Nikkei Plunges 3.4% as Oil and US PPI Surge Weigh on Sentiment
The Nikkei 225 index fell 3.38% to close at 53,372 on Thursday, while the Topix index weakened 2.91% to 3,609, reversing the previous session's gains. The decline was triggered by a surge in oil prices following new attacks on energy facilities in the Middle East, which rekindled inflation concerns and weighed on risk sentiment.
Japan is highly vulnerable to energy supply shocks due to its dependence on oil imports from the Middle East. Rising oil prices mean higher import costs and a greater risk of imported inflation, making market participants more defensive regarding the outlook for domestic consumption and corporate margins.
External pressure also came. The Japanese stock market followed a sharp sell-off on Wall Street overnight, triggered by hotter US PPI data and rising Fed inflation projections, making the room for interest rate cuts appear narrower. The combination of "hotter inflation + harder rate cuts" typically tightens financial conditions and puts pressure on global equity valuations.
Domestically, the Bank of Japan held interest rates as expected, but attention is focused on the renewed dissent: board member Hajime Takata, for the second consecutive year, proposed a 25 basis point increase to 1%, citing continued upward inflation risks. In the stock market, the technology sector led the decline, with Kioxia down 4.4%, Advantest down 4.6%, and Disco down 1.6%. Japanese markets will be closed on Friday for a national holiday. (CP)
Source: Newsmaker.id
