Nikkei set for worst week in over a month amid Middle East uncertainty

[TOKYO] Japan’s Nikkei share average slipped on Friday (Aug 21), putting it on course for its worst week in more than a month, as uncertainty surrounding the Middle East conflict lifted oil prices and fanned inflation fears.

The Nikkei eased 0.3 per cent as of the midday recess, setting up a 4 per cent weekly loss, the biggest since the week ended Jul 17.

The broader Topix declined 0.1 per cent, on track for a 3.4 per cent weekly slide.

The US will impose “the toughest sanctions in history” on Iran, Treasury Secretary Scott Bessent said on Thursday, as Washington ramped up economic threats in a bid to end the nearly six-month-old war. Crude oil jumped about US$2 overnight.

Inflation concerns lifted Japanese bond yields, with the 10-year government note’s yield rising 3 basis points to 2.875 per cent on Friday. Yields rise when bond prices fall.

“Profit taking is likely heading into the weekend with oil prices and bond yields elevated amid the uncertain situation in the Middle East,” said Maki Sawada, a strategist at Nomura Securities.

SEE ALSO

US stocks: Wall Street sinks as bond yields rise, Walmart results disappoint

Europe’s Stoxx 600 slips on inflation fears

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

Heavily weighted Uniqlo operator Fast Retailing slumped 4 per cent and was a major factor in the Nikkei’s losses.

AI-focused startup investor SoftBank Group sank 1.3 per cent. Overall, the Nikkei’s performance was fairly balanced, with 119 of its 225 components falling, 103 rising and three trading flat.

Shipping was the top performer among the Tokyo Stock Exchange’s 33 industry groups, rallying 2.8 per cent amid expectations for higher freight rates, with the crucial Strait of Hormuz shipping route remaining effectively closed. REUTERS