Key Takeaways
- Japan's Nikkei share average fell 1.12% due to concerns over increased costs from higher oil prices.
- Memory maker Kioxia saw a significant drop of 8.92%, influenced by South Korea’s benchmark index.
- Yaskawa Electric reported a substantial decline in first-quarter profits, contributing to the market downturn.
Japan's Nikkei share average experienced a notable decline on Monday, dropping 1.12% to close at 67,786.86 by midday, while the broader Topix edged down 0.2% to 4,027.82. The market was heavily influenced by rising oil prices following renewed conflict in the Middle East.
Daisuke Hashizume, a senior analyst at Daiwa Securities, commented that 'the market was concerned about increasing costs due to the rise in oil prices, and this came as the earnings season for Japanese firms kicked off.'
The increase in oil prices, driven by Iran's expansion of strikes on Gulf states following U.S. attacks, threatened energy shipments via the Strait of Hormuz, adding to investor concerns.
Chip-related stocks notably dragged down the Nikkei index, with Advantest and Tokyo Electron falling 1.54% and 1.14%, respectively. Memory maker Kioxia experienced an even more significant decline of 8.92%. Daiwa's Hashizume noted that 'the Nikkei is being influenced by South Korea’s benchmark index, which is heavily weighted toward memory makers such as SK Hynix.'
In Seoul, shares in SK Hynix dropped as much as 8.2% in early trade on Monday after a high-profile U.S. listing saw the company surge 12.8% in its Nasdaq debut on Friday.
Yaskawa Electric faced additional pressure with a first-quarter net profit decline of 21.7%, leading to a significant drop of 14.34%. This contributed significantly to the overall market downturn, as more than 1,500 stocks trading on the Tokyo Stock Exchange's prime market showed mixed performance, with 47% rising, 49% falling, and 3% remaining unchanged.
Bank shares also played a role in capping the Topix’s decline. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group saw rises of more than 2%, but these gains were not enough to offset the broader market's negative trend.
'The market was concerned about increasing costs due to the rise in oil prices, and this came as the earnings season for Japanese firms kicked off.'
Daisuke Hashizume, Senior analyst at Daiwa Securities
