Global Markets | Japanese shares set for biggest weekly drop in 11 months on Middle East conflict

Japanese shares marked their steepest weekly drop in almost a year on Friday, as the Middle East war heavily disrupted traffic through the Strait of Hormuz, choking oil supply and pushing investors out of risk and into cash.

The Nikkei 225 Index edged higher 0.6% to close at 55,620.84, after falling ‌as much as ⁠1.4% ⁠earlier in the session. The benchmark wrapped up the week 5.5% lower, its worst weekly decline by percentage since the week ended April 4, 2025, when U.S. President Donald Trump announced his sweeping tariffs.

The broader Topix climbed 0.4% to 3,716.93, but finished the week down 5.6%.


"The (markets') biggest concern is the rise in crude oil prices," said Shota Sando, an equity market analyst at Tokai Tokyo ⁠Intelligence Laboratory.

"If ‌it becomes clear that oil prices aren't likely ​to head toward the ​oft-cited $100 a barrel level, that would probably bring a ⁠sense of relief and help stabilize sentiment."

Rising oil prices ​tend to feed inflation in import-dependent Japan, tightening the policy ​backdrop for the Bank of Japan and weighing on the yen.

Meanwhile, oil prices fell for the first time in six days on Friday, with Brent crude futures down 0.26% to $85.14 per barrel as of 0705 GMT, near 20-month high of $86.28 a barrel hit on Thursday.

The energy explorers' index was among ‌the worst performers of the Tokyo Stock Exchange's 33-sector sub-indexes, down 1.9%. Inpex fell 1.7% and Japan Petroleum Exploration shed 2.6%. The oil sector lost 1.2%.

Software and IT-related shares ⁠were the best performers on the Nikkei, mirroring the U.S. markets overnight. Fujitsu added 5.4% and NEC rose 5.2%.

Separately, Rohm was untraded and pinned at the daily ​upper limit after the Nikkei newspaper reported auto-parts major Denso had proposed acquiring the chipmaker in a deal that could be worth as much as about $8.3 billion.

Denso closed 3.6% lower after dropping as much as 5.6%.

There were 135 advancers on the Nikkei index against 89 decliners.