Japan's Nikkei Stock Average fell over 5% in Tokyo on Monday morning, entering correction territory as escalating geopolitical risks drove a sharp sell-off in both Japanese and South Korean equities [1]. The decline was triggered by concerns over a protracted U.S.-Israel war with Iran, now in its second month, which has severely disrupted Persian Gulf oil supplies and fueled market volatility [1]. Reports of possible U.S. ground operations against Iran further heightened investor anxiety [1].
The yen weakened sharply, plunging past 160 against the dollar for the first time in 20 months, prompting Tokyo authorities to threaten intervention to stabilize the currency [1]. This raised speculation that the Bank of Japan or the Ministry of Finance could step in, as market participants closely monitored any signs of official action [1]. Analysts highlighted that rising oil prices, a weakening yen, and uncertainty over potential central bank responses are driving strong risk-off sentiment across the region [1].
Technical analysis indicates the Nikkei is testing key support levels, with traders watching for signs of intervention or further downside pressure [1]. The ongoing conflict and the possibility of a broader war in the Middle East remain major factors behind the current market sell-off [1].
Traders are advised to remain cautious, as volatility is expected to stay high amid geopolitical uncertainty and potential policy responses from Japanese authorities [1].
CONCLUSION
The sharp decline in Japanese and Korean stocks, coupled with a weakening yen and threats of intervention, underscores the high market volatility driven by escalating geopolitical risks. Investors are advised to remain cautious as uncertainty persists regarding both the Middle East conflict and potential policy actions from Tokyo. The market is likely to remain turbulent until clearer signals emerge from authorities or geopolitical tensions ease.