Global Markets | Nikkei falls 5% as surge in oil prices fans economic slowdown fears

Market Overview - The Nikkei average dropped 5.2% to 52,728.72, marking its lowest close since February 2, while the broader Topix fell 3.8% to 3,575.84 [1] - Nikkei average futures experienced a decline of up to 7.8% during the session, nearing a level that could have triggered a trading suspension [1] - Just two weeks prior, both the Nikkei and Topix reached record highs due to expectations of profit growth supported by government stimulus and an AI-driven market rally [1] Impact of Middle East Conflict - The market is increasingly concerned about the implications of the ongoing Middle East conflict, particularly the U.S.-Israeli war with Iran, which has led to a significant surge in oil prices [4][5] - Oil prices surged over 25% to their highest levels since mid-2022, exceeding $100 per barrel, driven by supply cuts from major producers and fears of prolonged shipping disruptions [4][5] - The conflict has shifted market sentiment from optimism to caution, with analysts questioning the potential for market upside [6] Sector Performance - All 33 industry sub-indices of the Tokyo Stock Exchange experienced declines, with the nonferrous metals sector suffering the most, losing 8.38% [6] - Chip-related shares saw significant losses, with Advantest and Tokyo Electron dropping 11.03% and 6.87%, respectively [6] - Bank shares also fell, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group each losing more than 3% [6]