The Japanese stock market recorded another correction in Tuesday's trading. The Nikkei 225 index slumped to its lowest level in a month after weakening by 0.84 percent to 66,678.36. This decline was driven by a combination of negative sentiment from escalating geopolitical tensions in the Middle East and a drop in global tech sector shares.
Geopolitical tensions escalated following the United States' move to reinstate blockades on Iranian vessels in the Strait of Hormuz. This policy triggered a surge in global crude oil prices, which subsequently sparked market concerns over potential monetary policy tightening by central banks to curb inflation.
On the other hand, the Tokyo stock exchange also followed the sell-off that hit the tech sector on Wall Street the previous night. Doubts among market players regarding the sustainability of the artificial intelligence (AI) investment trend put significant pressure, particularly on chip and electronic component manufacturers.
Several Japanese tech giants plunged into the red. Fujikura shares led the decline with a sharp correction of 6.7 percent, followed by Murata Manufacturing, which weakened by 3.1 percent. Declines were also experienced by Taiyo Yuden by 2.3 percent, SoftBank Group by 2.2 percent, and Kioxia Holdings, which shrank by 1.5 percent.
Analysts predict that the Nikkei index still has the potential to continue its downward trend in the next trading session. External pressure from Wall Street volatility and uncertainty in global oil prices are projected to continue overshadowing the movement of the Japanese stock market.
