The Nikkei 225 briefly fell below ¥51,000, and Japanese stocks are overreacting to higher oil prices, according to an explanation of the four reasons by Ikeda Yunosuke (池田雄之輔) of Nomura Securities.
In the Tokyo market on 23 March 2026, the Nikkei 225 closed at ¥51,515.49, down ¥1,857.04 from the previous week, after temporarily falling below ¥51,000. The deterioration of the situation in the Middle East and rising crude oil prices were behind the decline, and stock prices have continued to move more sharply than the impact on Japanese companies' earnings would suggest. Ikeda Yunosuke (池田雄之輔), head of the Market Strategy Research Department at Nomura Securities, explains this phenomenon through four reasons.
The first reason is that market expectations shifted from rate cuts by the Federal Reserve and the ECB to concern over rate hikes, prompting the yield curve to flatten. The view is that changes in the US market's policy outlook will also affect Japanese stocks. The second reason is that, beyond the immediate impact of higher crude oil prices on earnings, the price trend itself is driving market sentiment.
The third reason is that higher crude oil prices could pressure companies' earnings outlooks through constraints on the procurement of naphtha and heavy oil, leading to lower production volumes and higher costs. The fourth reason is that the prospect of a global recession and uncertainty over the US president's policy implementation have heightened the market's perception of risk, making the outlook for the Japanese stock market scenario more difficult to assess.