Global Markets | Japanese shares and yen fall, JGBs rise as Iran strikes continue

Japanese shares and the yen fell on Monday,while government bonds rose, after military strikes by the U.S. and Israel killed Iran's Supreme Leader Ali Khamenei.

The benchmark Nikkei 225 Index shed 0.9% to 58,301.84, paring an earlier decline of as much as 2.7%. The broader Topix slid 1.1% to ‌3,893.77.

The yen ⁠weakened 0.3% ⁠to 156.48, while the yield on the 10-year Japanese government bond fell 1 basis point (bp) ​to 2.1%.


Bond yields move inversely to prices.

Israel launched a new wave of strikes on ​Tehran on Sunday, and Iran retaliated with more missile barrages, a day after the killing of Ali Khamenei pitched the Middle East and the ​global economy into deepening uncertainty.

Airlines were among the ⁠biggest decliners, ‌while bank and brokerage shares were hit hard after ​the bankruptcy of ​British mortgage provider Market Financial Solutions.

A 10% rise in ⁠crude oil prices could push the net profit of Topix-listed ​companies down about 1% to 2%, said Kazunori Tatebe, ​chief strategist at Daiwa Asset Management.

"The market is uncertain whether the conflict will go on for a long time or end soon," Tatebe said.

"If it is escalated, the rise in oil prices will hit Japanese firms' earnings."

Chip-related heavyweights dragged on the Nikkei, with Advantest losing 2.2% and ‌Tokyo Electron falling 0.9%.

Japan's largest airline ANA Holdings slid 4.7%, while the country's largest brokerage Nomura Holdings fell 6%.

However, the energy ​explorers' index ​jumped 4.3%, while Inpex climbed ⁠4.1% to become one of the sharpest gainers on the Nikkei.

The Nikkei index is coming off February's sharp 10.4% rise, its best month in four. ​The benchmark had closed at an all-time high of 58,850.27 on Friday.

"The market was hit just after the Nikkei posted a record high last week," said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management.

"The Middle Eastern conflict has become an excuse to sell stocks and book profits."