Japan's Nikkei Slips on Oil Price Fears Amid Strait of Hormuz Tensions
Japan's Nikkei 225 index dropped 0.73% on Monday due to concerns about oil prices rising following renewed worries over the Strait of Hormuz, a critical chokepoint for global energy shipments.
The US President Donald Trump rejected Iran's terms to reopen the Strait of Hormuz, reviving fears of disrupted supply and higher crude prices.
This matters more for Japan than many other economies because it imports most of its energy, so pricier oil acts as a broad tax on companies and households.
Markets tend to translate an oil jump into higher inflation expectations, which can lead investors to demand higher returns, weighing on stock valuations. Additionally, a larger import bill can weaken the yen, making dollar-priced fuel even more expensive in local terms.