The Nikkei 225 declined 0.9% to below 57,600, while the broader Topix fell 1% to 3,860 on Tuesday, extending the previous session’s losses. Sentiment was pressured by rising tensions in the Middle East, which pushed oil prices higher and heightened global inflation worries.
Japan now faces the risk of sluggish economic growth coupled with persistent price pressures, a combination that complicates the Bank of Japan’s policy outlook. This comes even as Deputy Governor Ryozo Himino signaled that the central bank still intends to continue raising interest rates.
Investors also monitored geopolitical developments amid expectations that the US military will step up strikes against Iran, potentially targeting its missile production facilities, drone programs, and naval assets.
Export-oriented heavyweights led the declines, with notable losses in Toyota Motor (-5.5%), Mitsubishi Heavy Industries (-1.9%), Sony Group (-4.3%), Fast Retailing (-3.2%), and Hitachi (-2.3%).
