TOKYO, March 7, 2026, 15:01 JST
Japanese shares on Japan Exchange Group ended last week bruised even after a late Friday bounce. The Nikkei finished at 55,620.84 and the Topix at 3,716.93, leaving the two benchmarks down 5.5% and 5.6% for the week, their steepest weekly falls since early April 2025. 1
That matters now because Japan is exposed to imported energy, and the market shock landed just as oil spiked and policymakers were already juggling inflation and rate risk. Finance Minister Satsuki Katayama said Tokyo was watching markets with an “extremely high level of vigilance,” while Bank of Japan Deputy Governor Ryozo Himino said volatility by itself would not stop further rate rises. 2
Selling set the tone immediately. The Nikkei lost 793 points on Monday after the U.S. and Israel attacked Iran, then dropped another 1,778 points on Tuesday as 94% of stocks on the Prime Market fell; Tokyo Gas and Osaka Gas were rare gainers as investors shifted toward energy plays. Mamoru Shimode, chief strategist at Resona Asset Management, said Japan’s reliance on Middle East oil made the market easy to sell in that backdrop. 3
Wednesday was the break. The Nikkei slid 2,033 points to 54,245.54, all 33 industry groups fell and Prime Market turnover topped 10.5 trillion yen. The market also lost the gains made after the ruling party’s election win last month, while the wider regional selloff deepened: Japan and Taiwan fell more than 4% each and Seoul’s KOSPI dropped more than 11%, showing how quickly investors were unwinding crowded semiconductor bets across Asia. 4
There was a sharp snapback on Thursday. The Nikkei rose 1,032 points and at one stage was up more than 2,300 points after reports that Iran had signaled openness to talks, prompting short-covering, or buying back bearish bets, in energy, financial and chip-linked names. Rina Oshita, senior strategist at Okasan Securities, said the rebound followed a correction that had moved “at speed,” but warned the upside could stay heavy while the Middle East outlook remained murky. 5
Friday added 342 points, but the tone was still fragile. The market swung between losses and gains before bargain hunters gained the upper hand, helped by firmer U.S. stock futures and softer oil in Asian trade; Fast Retailing and SoftBank Group rose more than 1%, while Fujikura, Ibiden and Toyota Tsusho fell, and Prime Market trading value came to 7.36 trillion yen. Reiko Sera, senior market strategist at Sumitomo Mitsui Trust Bank, described the session as a tug of war between buyers wanting a pullback and investors still wary of the Middle East. 6
The swings hit an already busy venue. JPX said on March 2 that average daily trading value on the Prime Market in February was 9.8666 trillion yen, while derivatives trading value reached a February record 300 trillion yen, suggesting last week’s shock ran through a market that was already carrying heavy volume. 7
Next week brings fresh tests. Traders are watching U.S. consumer price data and Japan’s March “major SQ” on Friday, the special settlement price used to settle Nikkei futures and options at expiry. Hideyuki Suzuki, head of investment research at SBI Securities, said the chart suggests a bottom may be near, but only if companies still deliver the double-digit earnings growth many investors expect for the next fiscal year. 8
But the main risk is straightforward: oil stays high and the conflict drags on. Investors are now pricing a longer war and a sharper energy shock, and Yutaka Miura, senior technical analyst at Mizuho Securities, said higher crude prices are broadly negative for Japan’s economy and keep institutions cautious about putting money back to work. That leaves Friday’s bounce looking more like relief than resolution. 9
