On March 9th, the Japanese stock market experienced historic fluctuations, with the Nikkei Stock Average plummeting more than 4,200 points at its lowest point, ultimately falling 2,892.12 points (5.2%), marking the third largest point decline in history.
historical point drop
Japan’s stock market endured a day of historic volatility on Monday, with the Nikkei average falling sharply due to escalating conflict in the Middle East and soaring oil prices. In a session defined by panic selling, the benchmark index reached its most dramatic moment, plunging more than 4,200 points at one point.
In the end, the Nikkei Stock Average fell 2,892.12 points (5.2%) to close at 52,728.72. Despite a slight recovery from session lows, the final numbers represent the third-largest points decline in history. The broader Topix index also felt the pain, dropping 141.09 points to close at 3,575.84. In the prime market, losses were widespread, with nonferrous metals, machinery, and glass products leading the decline.
Large-cap tech stocks, which were market favorites until February, were particularly hard hit as investors moved money out of high-growth assets. The main catalyst for the rout was the weekend’s geopolitical upheaval. The prospect of an early resolution to the Middle East conflict has disappeared, and oil prices have skyrocketed.
On Sunday, March 8, the price of West Texas Intermediate crude oil futures briefly exceeded $119 per barrel in the New York market, the highest price since June 2022. The appointment of Mojtaba Khamenei as Iran’s supreme leader following the death of his father, Ayatollah Khamenei, signaled to markets that Iran’s hardline stance is unlikely to soften. Additionally, reports that President Donald Trump is interested in deploying US ground forces inside Iran have sent a chill through the trading scene.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said: “As President Trump has said, it looks like the market is already pricing in (the conflict) to continue for another four to five weeks or more.”
The energy crisis immediately put pressure on the Japanese yen. The dollar rose to the low-158 yen level in Tokyo as traders weighed the impact of rising energy costs on Japan’s import-dependent economy. Nomura Securities strategists suggested that even though Iran’s leadership changes, the underlying religious and political system will remain constant, and that the risk premium for oil and associated pressure on stock prices could persist for a long time.
Monday’s turmoil in Tokyo was mirrored across Asia’s major financial hubs, as a combination of rising energy costs and geopolitical instability triggered a broad regional stock selloff. Extreme volatility in South Korea caused the index to plummet by more than 8%, forcing the Korean exchange to impose a circuit breaker for 20 minutes during morning trading. The benchmark Kospi fell 333 points, or 6%, to close at 5,251.87.
In Hong Kong, the Hang Seng Index fell 349 points (1.4%) to end at 25,408. The Shanghai Composite Index fell 0.7% to close at 4,096, while the tech-heavy STAR Composite Index fell 1.4%.
Frequently asked questions ❓
- What is the cause of the recent decline in the Nikkei Stock Average? The escalating conflict in the Middle East and rising oil prices caused the significant decline.
- How big was the decline in the Nikkei Stock Average? The index fell 2,892.12 points, a decline of 5.2%, the third largest decline on record.
- Which sectors have been most affected by this market downturn? In prime markets, non-ferrous metals, machinery and technology stocks led widespread losses.
- How has this volatility affected the Japanese Yen? The yen faced pressure as the dollar rose to the high 158 yen range due to soaring energy costs.
