Nikkei Average Dives on Fears of Long Middle-East Conflict

Tokyo, March 4 (Jiji Press)–Japan’s benchmark Nikkei 225 stock average sank more than 2,000 points Wednesday as fears of a prolonged conflict between U.S.-Israeli forces and Iran continued to spur risk-adverse selling. The index dropped 2,033.51 points, or 3.61 pct, from Tuesday to end at 54,245.54. It briefly fell below 54,000 for the first time since Feb. 6. The broader TOPIX index finished 138.50 points, or 3.67 pct, lower at 3,633.67. Both indexes ceded ground for the third straight day. The Nikkei’s point loss was the fifth largest on record. It gave up about 4,600 points, or 7.82 pct, in the three-day tailspin. Investors are increasingly worried that a prolonged conflict could have a negative impact on the Japanese economy and corporate profits, especially through a blockade of the Strait of Hormuz, a critical chokepoint in a key oil transport route. “It’s unclear how long the increase in crude oil prices (amid the tense Iran situation) will continue, so investors are refraining from buying,” an official at a major securities firm said. If oil tankers remain unable to pass through the Strait of Hormuz, investor concerns over the economic impact would grow and the Nikkei average could fall to as low as around 45,000, an official at a bank-affiliated brokerage predicted. The Middle East crisis is battering stock markets around the world, with Asian market gauges including South Korea’s KOSPI also logging massive drops Wednesday. U.S. stock futures also met with selling in off-hours trading. Meanwhile, an official at another major securities house said that a sense of overheating in the Tokyo market reflecting the Nikkei’s recent record-breaking advances has dissipated, adding that individual investors who sold stocks Wednesday may buy them back Thursday and later. “Conditions are now in place for the market decline to stop,” the official said. END [Copyright The Jiji Press, Ltd.]