Tokyo stocks experienced a sharp decline on Monday, with the Nikkei Stock Average closing at its lowest level since January 8, following a surge in crude oil futures triggered by U.S. President Donald Trump's threat to attack Iranian power plants if Iran does not lift the closure of the Strait of Hormuz [1]. The Nikkei ended down 1,857.04 points, or 3.48 percent, at 51,515.49, after briefly losing over 2,600 points during the session. The broader Topix index also fell, finishing 122.96 points, or 3.41 percent, lower at 3,486.44 [1]. The main decliners on the Prime Market were marine transportation, nonferrous metal, and real estate issues [1].
Japanese markets had been closed on Friday for a public holiday, and the Nikkei index lost over 3,700 points in two trading days amid escalating tensions in the Middle East [1]. The U.S. dollar strengthened to the upper 159 yen range in Tokyo as investors sought safety, although its upside was limited by concerns over possible currency interventions by Japanese authorities. Atsushi Mimura, vice finance minister for international affairs, stated that Japan will take "all possible steps" to address speculative moves in the foreign exchange market [1].
The Nikkei briefly sank over 5 percent, falling below the 51,000 yen line, after West Texas Intermediate crude oil futures briefly topped $100 per barrel amid the crisis [1]. The index partially trimmed its losses in the afternoon due to dip-buying, according to dealers [1]. Trump gave Iran 48 hours to open the strait in a social media post at 8:44 a.m. on Sunday, Japan Standard Time, while Iran responded that the waterway would be shut completely if its power plants are attacked [1].
Market participants expressed concerns about disruptions to logistics and a potential economic slowdown driven by high energy costs. Maki Sawada, strategist at Nomura Securities, noted that "no progress toward a solution has been seen" regarding the Middle East situation [1]. Shota Sando, an equity market analyst at Tokai Tokyo Intelligence Laboratory, commented that investors "adjusted their positions as President Trump showed no intention of stopping the war, implying a prolonged conflict" [1].
CONCLUSION
The escalation in the Middle East, particularly Trump's threat to Iran, has led to a significant sell-off in Tokyo stocks and a surge in crude oil prices. Market sentiment remains negative, with concerns about prolonged conflict, high energy costs, and disruptions to logistics weighing heavily on financial markets. Analysts see no immediate resolution, suggesting continued volatility ahead.