Japan’s Nikkei Stock Average came under heavy selling pressure on Wednesday, extending its losses for a third straight session. The index opened at 65,195.43, down 1,019.91 points from the previous close, before its decline widened. By 9:05 am, the Nikkei had fallen around 1,470 points, briefly slipping below 65,000 as investors reacted to renewed geopolitical and market concerns.
Why Is Nikkei Falling Today?
Investor sentiment was hit by a combination of weaker US equities, rising crude oil prices and increasing Japanese long-term interest rates. The latest jump in oil prices followed the US strike on Iran, raising concerns that the conflict could intensify inflationary pressures and affect global monetary policy. Higher Japanese bond yields also weighed on stocks, particularly growth companies whose valuations are more sensitive to interest-rate movements.
US Stocks Also Decline
Wall Street ended lower in the previous session, adding to the pressure on Japanese equities. The Dow Jones Industrial Average fell 419.02 points to 52,766.88, while the Nasdaq Composite declined 271.11 points to 26,099.77. The S&P 500 also dropped 54.67 points to 7,631.47.
All three major US indexes therefore closed lower, with geopolitical concerns and higher crude prices weighing on sentiment.
Middle East Tensions Hit Tokyo Market
Selling pressure was already evident before trading began in Tokyo. Chicago Nikkei futures settled at 64,870, down 1,280 points from the Osaka Exchange settlement on September 1. Concerns surrounding the Middle East conflict added to worries over the potential impact of higher energy costs on the global economy.
Market participants are particularly watching whether sustained increases in crude prices could reignite inflation and complicate interest-rate decisions by the US Federal Reserve.
Yen Remains Weak Against Dollar
The Japanese yen continued to trade at weak levels against the US dollar. Around 9:02 am, the dollar-yen pair was in the low 160-yen range, after ending the previous session around 159.98-160.00 yen. The euro-yen pair was meanwhile trading in the mid-185-yen range.
What Technical Levels Are Investors Watching?
The Nikkei’s 25-day moving average, positioned around 65,700, has been closely watched as a near-term support level. The 75-day moving average, near 66,500, has acted as an important resistance area.
The latest decline comes after the index repeatedly recovered from sharp morning losses during the previous two sessions. Investors had shown willingness to buy at lower levels, but Wednesday’s opening indicated stronger selling pressure.
