Japanese Shares Slip on Middle East Concerns

The Nikkei 225 fell 0.2% to around 62,600 on Monday, pulling back from recent record highs as oil prices surged after President Donald Trump rejected Iran’s response to his peace proposal, leaving the Strait of Hormuz effectively shut. Higher energy prices have added to inflation concerns and weighed on sentiment across oil-importing economies such as Japan. Notable declines were seen in SoftBank Group (-6.3%), Advantest (-2%), and Furukawa Electric (-1.6%). Nintendo also dropped 8.3% after warning that hardware and software sales are expected to decline and that rising memory chip costs are squeezing margins. In contrast, Sony Group rose 8.5% after announcing plans to repurchase up to ¥500 billion of its shares and forecasting an 11% increase in operating profit for the fiscal year ending March 2027, supported by growth in its music and image sensor businesses.

The Nikkei 225 climbed 0.8% to above 63,200 on Monday, reaching a new all-time high as technology shares powered higher on the back of strong corporate earnings and continued optimism surrounding the artificial intelligence sector. Investors also looked past rising oil prices after President Donald Trump rejected Iran’s response to his peace proposal as “TOTALLY UNACCEPTABLE,” leaving the Strait of Hormuz effectively closed. Leading gains among technology stocks came from Kioxia Holdings (9.8%), SoftBank Group (2.1%), Lasertec (4.2%), Fujikura (4.8%), and Tokyo Electron (2.1%). In corporate developments, Sony Group surged 10.5% after unveiling plans to buy back up to ¥500 billion of its shares and forecasting an 11% rise in operating profit for the fiscal year ending March 2027, supported by steady expansion in its music and smartphone image sensor businesses.

The Nikkei 225 Index slipped 0.19% to close at 62,713, while the broader Topix Index fell 0.29% to 3,829 on Friday, paring gains from the previous session as renewed fighting between the US and Iran in the Strait of Hormuz weighed on sentiment and revived geopolitical concerns. Still, the Nikkei and Topix indexes advanced 5.38% and 2.7%, respectively, for the week, supported by an earlier rally in tech and AI-linked stocks. In corporate developments, Sony announced plans to repurchase up to ¥500 billion worth of its shares and projected an 11% increase in operating profit for the fiscal year ending March 2027, driven by solid growth in its music and smartphone image sensor businesses. Meanwhile, Nintendo said it will raise the retail price of the Switch 2 after forecasting weaker sales for its flagship console amid the ongoing memory chip shortage. Elsewhere, Toyota reported a 49% decline in fourth-quarter operating profit as US tariffs weighed on earnings.