Nikkei 225 In Japan Leads Asian Market Selloff Amid Growing Worries of Regional War in the Middle East

Akira Ito
19 Apr, 2024
Tokyo

Market sentiment in Tokyo and other financial capitals in Asia was battered by the worries of an all-out regional war sparked by rapidly escalating tensions between Israel and Iran. 

Asian markets fell in Friday's trading, and the Nikkei 225 Stock Average led the decliners with a loss of 3.4%.

In Tokyo, market sentiment has been weak as investors grapple with interest rate uncertainties, a persistent fall in the yen, worries about resurgent inflation, and escalating tensions in the Middle East. 

Israel is widely expected to be behind several confirmed explosions in Iraq, Syria, and western Iran's city of Isfahan, where Iran's key nuclear installations are located. 

However, Iranian officials told Reuters that there was no explosion near the nuclear installation, but the noise was related to Iran activating its air defense system, contradicting reports of explosions in Iran's local media. 

The U.S. official confirmed in an interview with ABC News that Israel is targeting Israel's nuclear installations as a retaliation to Iran's conducting its first-ever direct attack on Israel. 

Iran carried out its 300 drones and missile strikes after Israel attacked Iran's embassy in Syria, which Iran considers an attack on its territory and that killed two Iranian generals and six other ranking officials. 

Crude oil jumped 4%, gold edged 0.4%, and the yield on 10-year U.S. Treasury notes edged higher as investors sought safe-have assets. 

The CSI 300 index in Shanghai fell 1%, the ASX 200 index in Sydney dropped 1.5%, the KOSPI index in Seoul decreased 2.8%, and the Nifty 50 index in Mumbai fell 0.6%. 

In early afternoon trading, the Nikkei 225 Stock Average dropped 2.7% to 37,049.36 and the Topix index declined 2% to 2,623.30. 

The Nikkei 225 fell below 37,000 for the first time in ten weeks on the weakness in semiconductor stocks. 

The Nikkei 225 dropped as much as 3.4%, or 1,313.27, in the morning session but recovered from the session's low in the afternoon trading. 

The safe-haven yen rebounded to 153 before falling back to 154.40 against the U.S. dollar in late morning Tokyo trading, and the yield on a 10-year Japanese government bond was held at 0.84%. 

The Korean won declined to 1,385.53, the Indian rupee recovered from a record low of 83.65, and the Chinese yuan hovered near 7.25 against the U.S. dollar. 

Tech stocks led the decliners, with SoftBank, Tokyo Electron, Advantest, Screen Holdings, Renesas Electronics, and Disco Corp. declining between 3.5% and 8%. 

Banks and financial services stocks were also among the leading decliners as the yen approached the 155 mark. 

Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial Group declined between 0.7% and 0.9%. 

Inpex jumped as much as 3% before easing to a 1.1% increase to 2,398.50 after crude oil prices advanced 4%. 

Vehicle makers Toyota Motor, Honda Motor, Nissan Motor, and Subaru declined between 2% and 3%.