Japanese Shares Head for Sharp Weekly Fall

The Nikkei 225 Index fell 0.5% to around 55,000, while the broader Topix Index slipped 0.4% to 3,688 on Friday, leaving both benchmarks on track to drop more than 6% for the week as the Middle East conflict unsettled financial markets. The US-Israeli offensive against Iran has now entered its seventh day, while Tehran launched a new wave of missile and drone strikes across the Gulf. Surging oil prices, which stoked inflation concerns, also weighed on equities globally, with Bank of Japan Governor Kazuo Ueda cautioning that the war could significantly affect Japan’s economy. Tech stocks faced renewed pressure, with notable declines for Kioxia Holdings (-2.3%), Fujikura (-3%), and Lasertec (-1.7%). Defense stocks also fell, including Mitsubishi Heavy Industries (-0.5%) and Kawasaki Heavy Industries (-2.2%).

The Nikkei 225 Index rose 1211 points or 2.23 percent on Thursday to close at 55457 points. Leading the gains are Toho Zinc (8.01%), Inpex (7.21%) and Nippon Electric Glass (6.86%).

The Nikkei 225 Index jumped 1.9% to close at 55,278, while the broader Topix advanced 1.9% to 3,703 on Thursday, recovering losses from earlier in the week and tracking a tech-led rebound on Wall Street. Those moves came as inflation fears abated, though hostilities between the US and Iran showed no signs of easing. Markets will need greater clarity on the duration of the conflict and the extent to which it will impact growth and inflation for the rebound in equities to be sustained. Bank of Japan Governor Kazuo Ueda also warned escalating tensions in the Middle East could materially impact Japan’s economy, signaling that the central bank may keep policy rates unchanged for a prolonged period. Technology stocks spearheaded the advance, with robust gains in Fujikura (3.7%), Advantest (4.2%), and SoftBank Group (4.3%). Financials also outperformed, as Mitsubishi UFJ Financial, Mizuho Financial, and Sumitomo Mitsui posted gains ranging from 3.4% to 6.4%.