The Nikkei 225 Index fell 1.2% toward 5,500, while the broader Topix Index dropped 2.7% to 3,670 on Wednesday, marking a third consecutive session of losses for Japanese equities. The downturn was driven in part by rising oil prices stemming from the conflict in the Middle East, which heightened inflation concerns.
Japanese stocks also mirrored overnight weakness on Wall Street as the US–Israeli war on Iran entered its fifth day. On Tuesday, Israel struck a building where clerics had gathered to choose a new Supreme Leader. Market sentiment steadied somewhat after President Donald Trump pledged to provide naval escorts for oil tankers transiting the Strait of Hormuz.
Financials led the selloff, with notable declines in Mitsubishi UFJ (-3.3%), Sumitomo Mitsui (-4.6%), and Mizuho Financial (-2.6%). Technology stocks extended their slide as well, including Fujikura (-3.5%), Advantest (-1.6%), and Tokyo Electron (-2.1%).
