Japan's Nikkei falls as rise in oil prices dims corporate outlook

TOKYO: Japan’s Nikkei share average fell on Monday as investors weighed the corporate outlook after a renewal of conflict in the Middle East lifted oil prices.

The Nikkei fell 1.12% to 67,786.86 by the midday break, while the broader Topix edged down 0.2% to 4,027.82.

“The market was concerned about increasing costs due to the rise in oil prices, and this came as the earnings season for Japanese firms kicked off,” said Daisuke Hashizume, a senior analyst at Daiwa Securities.

Oil prices jumped on Monday as Iran expanded strikes on Gulf states following attacks by the United States, threatening energy shipments via the Strait of Hormuz.

Chip-related stocks dragged the Nikkei lower, with Advantest and Tokyo Electron falling 1.54% and 1.14%, respectively.

Memory maker Kioxia tanked 8.92%.

“As the market eyes memory prices, the Nikkei is being influenced by South Korea’s benchmark index, which is heavily weighted toward memory makers, such as SK Hynix,” said Daiwa’s Hashizume.

Shares in SK Hynix dropped as much as 8.2% in early trade in Seoul on Monday as investors booked profit, after a high-profile U.S. listing saw the world’s leading AI memory chipmaker surge 12.8% in its Nasdaq debut on Friday.

Yaskawa Electric tanked 14.34% after the robot maker’s first-quarter net profit fell 21.7%.

Bank shares capped the Topix’s decline. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group rose more than 2% each.

Of more than 1,500 stocks trading on the Tokyo Stock Exchange’s prime market, 47% rose, 49% fell, and 3% traded flat.