The Nikkei 225 plunged more than ¥2,100 at one point. The denial of US-Iran dialogue and the policy of continuing the Strait of Hormuz blockade reignited geopolitical risks and dampened investor sentiment.
On the 19th, the Nikkei 225 fell sharply in Tokyo trading, at one point extending its decline beyond ¥2,100. The trend of major US indices falling for 3 consecutive trading days in the previous session, combined with uncertainty over the situation in the Middle East and rising interest rates in Japan and overseas, fueled selling across a broad range of stocks.
On the 18th, President Trump posted that there were no plans for talks or dialogue with Iran and indicated a policy of continuing the blockade of the Strait of Hormuz. This heightened concerns that tensions between the United States and Iran could be prolonged, bringing the risk of persistently elevated crude oil prices into focus in the market.
In the previous session, the Dow Jones Industrial Average fell $116.38 and the Nasdaq Composite Index fell 355.20 points, each recording a third consecutive day of declines. Expectations for higher long-term US interest rates also pushed up corporate borrowing costs, while investment flows generally weakened.
The focus going forward will be on the possibility of renewed dialogue between the United States and Iran, the trajectory of crude oil prices, and the direction of monetary policy in major economies. If tensions in the Middle East continue to escalate, risk aversion in equity markets could intensify.