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TOKYO, Japan – The Japanese yen saw a sharp spike while Tokyo shares plummeted as markets react to Iran’s expected retaliation against the United States.

Investors quickly flocked to safe-haven currencies and assets. Gold and bonds were hot commodities while the price of the Japanese yen (JPY) and the Swiss franc (CHf) spiked. The yen rose by 0.8% to reach 107.65 against the US dollar (USD). It was the highest the currency has hit in three months. Meanwhile, the franc jumped by as much as 0.4%.

Shares in Tokyo also saw a massive decline, with the Nikkei 225 even falling by more than 600 points to go below the 23,000 line. It was the first time the index dropped so low since November. It eventually ended lower by 1.57% or 370.96 points from Tuesday. The benchmark is currently at 23,204.76, the lowest it has been since December 4.

The Topix of every First Section issue on the Tokyo Stock Exchange ended the day 1.37% or 23.65 points lower at 1,701.40.

Tokyo wasn’t the only one to experience losses. Most Asian markets also slipped. The KOSPI dropped 1.11% at 2,151.31, while the Hang Seng Index declined 0.83% at 28,087.92. Singapore’s Straits Times dropped 1.7%, its biggest loss in more than five months.

China also traded lower. The Shanghai Composite dropped 1.22% at 3,066.89 while the Shenzhen Composite slipped 1.24% to 1,769.58. The Shenzhen Component also went down 1.13% to 10,706.87.

The market decline was caused by Iran’s launch of over a dozen missiles that targeted two Iraqi military bases with US forces. The attack was in retaliation to last week’s US air strike that killed one of Iran’s top military commanders.

One analyst from Mizuho Securities Co. suggested that investors weren’t expecting a direct military action, and stocks dropped over fears that the issue would escalate. However, a tweet from Iran’s Foreign Minister Mohammad Javad Zarif seemed to have alleviated fears.

According to his tweet, Iran is not looking for “escalation or war.” But he cautioned that they would defend themselves against any more aggression.

Market analyst Makoto Sengoku of the Tokai Tokyo Research Institute said Zarif’s statement provided some relief to the otherwise tense market. It also put a stop to yen’s appreciation. By Wednesday afternoon, the yen was at 108.41.

Iran’s action has caused Japanese media to speculate on whether Prime Minister Shinzo Abe will cancel his trip to the region. But Chief Cabinet Secretary Yoshihide Suga said they would keep an eye on the situation before making a decision.

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