Nikkei falls 5pc as surge in oil prices fans economic slowdown fears

TOKYO: Japan’s Nikkei average dropped more than 5 percent to a one-month low on Monday amid a broad selloff, as a surge in oil prices fanned fears of inflation and an economic slowdown.

The Nikkei fell 5.2 percent to 52,728.72, its lowest close since February 2, while the broader Topix slipped 3.8 percent to 3,575.84.

The Nikkei average futures fell as much as 7.8 percent during the session, close to a level that could have triggered the circuit breaker to suspend trading.

Just two weeks ago, both the Nikkei and Topix hit record highs on expectations of profit growth, backed by Prime Minister Sanae Takaichi’s stimulus and an artificial intelligence-driven rally.

“The market started taking the impact of the Middle East conflict more seriously. Until last week, there was some optimism and investors picked up stocks on dips, but now there is a question about the market upside,” said Hitoshi Asaoka, chief strategist at Asset Management One.

“The Nikkei’s decline at today’s pace is justifiable if the Middle East conflict drags on.”