Susanna Riva On October 8, the Tokyo Stock Exchange began the final session of the week on a downward trend. The benchmark Nikkei index opened down between -0,26% and -0,69%, depending on the source, losing 180, 420, and 475 points, respectively. This downward movement follows two consecutive days of record gains, during which the Japanese market gained nearly 3.500 points.
The atmosphere is dominated by growing risk aversion fueled by external factors, including the volatility of US technology stocks and geopolitical uncertainty in the Middle East.
Reasons for the Nikkei's decline
Among the main causes, the rebound in US technology stocks dragged Japanese indices down. The correction on Wall Street, triggered by a surge in Treasury yields, particularly affected semiconductor and artificial intelligence stocks, sectors vital to the Japanese economy.
At the same time, increased pressure on oil prices , fueled by recent US threats to Iran, has rekindled fears of possible increases in energy costs and inflation, making the investment cycle more costly.
Inflation and oil prices
Oil prices have once again crossed critical thresholds, prompting analysts to revise their global inflation forecasts.
In Japan, where energy is largely imported, soaring prices are putting additional pressure on corporate margins, contributing to a cautious sentiment among investors. Furthermore, Japanese bond yields have remained high, increasing the cost of capital for companies and reducing risk appetite in equity portfolios.
Yen Performance and Currency Market
Despite the jitters on the stock markets, the yen showed some resilience. Against the dollar, the exchange rate settled just above 158 yen per dollar, confirming a stability that contrasts with the volatility of stocks. Against the euro, the Japanese yen traded around 177,20, marking a slight strengthening compared to the previous session. This stability was fostered by a flow of capital seeking safety, preferring the Japanese yen to currencies more sensitive to geopolitical turbulence.
The interplay between a declining stock market and a relatively stable currency creates a complex picture for investors. On the one hand, pressure on technology stocks and energy-related sectors suggests continued caution; on the other, the strong yen offers a foothold for investors wishing to mitigate risk exposure. In this context, analysts will closely monitor the evolution of tensions in the Middle East and the movements of bond yields, as both could further impact both the Nikkei index and the yen's trajectory in the coming weeks.