Japanese stocks plummet as Middle East conflict widens

[TOKYO] Japanese shares fell at the sharpest pace in months on Tuesday (Mar 3), as investors remained on edge for a second straight day following the US-Israeli strikes on Iran.

The Topix slumped 3.2 per cent to 3,772.17, the fastest decline since April, while the Nikkei declined 3.1 per cent to close at 56,279.05, the biggest drop since November last year, after falling as much as 3.4 per cent.

“Ongoing gains in crude oil futures on worsening Middle East tensions, together with a stronger US dollar and weaker yen, are fuelling views that inflation could accelerate,” said Maki Sawada, a strategist at Nomura Securities.

“This uncertainty, seen as potentially impacting future monetary policy, is weighing on the equity market overall.”

The US-Israeli air war against Iran escalated with no end in sight, as Israel struck Lebanon in response to Hizbollah attacks and Teheran continued launching missiles and drones at Gulf states hosting US military bases.

All 33 industry subindexes on the Tokyo bourse were down, led by a 5.5 per cent fall in the oil and coal sector followed by a 5.4 per cent decline in the transport equipment industry.

Toyota Motor, the world’s largest automaker by sales, dropped 6.1 per cent, the sharpest drop since September 2024, while Japan’s largest airline, ANA Holdings, fell 3.3 per cent.

ENEOS Holdings, Japan’s biggest refiner, lost 6.3 per cent, the sharpest drop since April.

The largest percentage decliner, though, had nothing to do with the Middle East tensions.

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There were 219 decliners on the Nikkei index against six advancers. REUTERS