Nikkei slides as Middle East stalemate fuels oil, inflation concerns
Shipping stocks benefited from expectations for higher freight rates due to the Iran war
Japan's Nikkei share average slipped on Tuesday (Aug 18), trailing an impressive five-day winning streak, as a deadlock in the Middle East conflict caused oil prices to surge and reignited worries about bond market risks and inflation. The Nikkei plummeted 1.1 percent to 68,460.56 by late morning, following a 5.5 percent surge over the previous five trading sessions. The broader Topix retreated 0.2 percent to 4,177.50.
A cease-fire between the US and Iran had expired earlier in the week, with the United States refusing to prolong the truce and Iran vowing to adopt a "fully offensive" military stance. As a result, crude oil prices rose as shipping traffic through the vital Strait of Hormuz shipping lane once again came to a standstill, and apprehensions about global inflation prompted a rise in bond yields, including in Japan.
Wataru Akiyama, an equities strategist at Nomura Securities, remarked, "Increasing interest rates typically highlight the relative overvaluation of share prices." Inflationary concerns, prevalent in both Japan and the US, could potentially weigh on the stock market in the future. Shipping stocks, however, experienced a lift from forecasts of higher freight rates, and marine transport emerged as the top performer among the Tokyo Stock Exchange's 33 industry groupings, surging 4.1 percent.
Meanwhile, AI stocks were mixed, with SoftBank Group surging 2.7 percent, while Tokyo Electron plummeted 4.3 percent.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
