Japanese shares end lower as Middle East conflict spurs risk aversion

Japan's ​Nikkei closed lower on Friday ​and posted a second consecutive weekly decline of 3.2%, ​as escalating tensions in the Middle East fuelled inflation concerns and prompted investors to dump riskier assets.

The Nikkei dropped 1.2% to close at 53,819.61 on Friday, after sliding ‌as much ⁠as 2.1% ⁠earlier in the session. The index has lost 8.5% since its February 27 ​close, before the U.S.-Israeli war with Iran erupted. The broader Topix eased 0.6% to 3,629.03.

"Although ​crude oil prices have retreated slightly from their recent peak, they remain well above levels seen before the conflict began," Shutarou Yasuda, market ​analyst at Tokai Tokyo Intelligence Laboratory, said ⁠in a ‌report. "Risks of turbulence in equity markets are likely to ​persist next ​week, depending on the news flow."


Brent futures for May ⁠edged 0.04% lower to $100.42 a barrel by 0615 GMT. ​U.S. West Texas Intermediate (WTI) crude for April CLc1 was ​down 0.6% at $95.12 a barrel.

The conflict has dampened sentiment in Japan markets, which had been driven by strong corporate earnings and expectations of expansionary fiscal policy after Prime Minister Sanae Takaichi won a snap election.

In the Nikkei index, there were 72 advancers and 152 laggards.

Technology ‌shares dragged on the benchmark, with SoftBank Group slipping 4.5% and chip-testing equipment maker Advantest down 3.5%.

Honda Motor dropped ​5.6%, its ​steepest percentage drop since ⁠February 2025, after Japan's second-largest automaker said it would post its first annual loss in almost 70 years as a listed company over up to $15.7 ​billion in restructuring costs tied to its electric-vehicle business.

Bucking the broader trend, energy-related shares rose, with the Tokyo bourse's energy explorers index, the best percentage gainer among its 33 sub-indexes, up 2.1%. Shares of Inpex, Japan's largest oil and gas explorer, added 2%.