Japan's stock market experienced a significant downturn on Monday, falling sharply after a two-day holiday weekend. The Nikkei 225 dropped below the crucial 27,000 threshold, tumbling 717.48 points, or 2.59%, to settle at 26,978.60. This marked the largest one-day loss for the index in almost a month and erased recent gains from the prior three trading sessions. The decline came in response to mixed global signals, including negative moves from U.S. markets and mounting fears over potential military escalations in the Russia-Ukraine conflict.
Investors remained cautious as they processed U.S. inflation data and weighed the implications of tighter monetary policies. In Japan, concerns about the pandemic also lingered, even as the number of new daily coronavirus cases continued to trend downward over the weekend.
Top losers and gainers
SoftBank Group, one of the leading stocks in the market, fell over 4%, dragging the overall index lower. Fast Retailing, the parent company of the global fashion brand Uniqlo, dropped nearly 3%. In the automotive space, Toyota saw a sharp decline, losing almost 4% of its value, while Honda shares dipped more than 1%. Bridgestone suffered the worst loss of the day, plummeting nearly 10%.
A handful of stocks bucked the downward trend. Inpex surged more than 6%, Toho Zinc gained almost 5%, and Citizen Watch rose over 4%. In the banking sector, performances were mixed. Sumitomo Mitsui Financial and Mizuho Financial each fell close to 1%, but Mitsubishi UFJ Financial edged up nearly 1%.
Global markets follow suit
Friday saw U.S. stock markets endure their worst losses in weeks. The tech-heavy Nasdaq was among the most affected. The sell-off continued into Europe, with France's CAC 40 declining 1.3%, Germany's DAX falling 0.4%, and the UK's FTSE 100 slipping 0.2%.
Energy prices hit seven-year milestone
Amid the market turbulence, crude oil prices rose sharply. West Texas Intermediate Crude (WTI) futures closed at $93.10 a barrel, rising $3.22, or 3.6%, to reach a fresh seven-year closing high. The International Energy Agency attributed the surge to a significant shortfall in OPEC oil production in January.
The U.S. dollar weakened slightly against the Japanese yen, trading in the low 115 yen range. Investors appeared to favor safer assets amid global volatility. Domestic concerns continued to weigh on sentiment, with traders closely watching Japan's progress in managing the pandemic despite a recent decline in new cases.
Additional losers on the Tokyo bourse included M2, Amada, Keyence, and others, with declines ranging from 6% to nearly 10%. Major industrial companies like Murata Manufacturing and Terumo each lost 5.5%, while Z Holdings, Fujikura, and NTT Data fell nearly 5%.
On the positive side, Kajima and Haseko each rose more than 3%, and several tech-related companies like Trend Micro, Daikin Industries, and Yokohama Rubber added over 4%. These gains offered a faint contrast to the broader market's pessimism.