The Japanese stock market fell for the third consecutive session on Monday, reflecting investors' growing concerns about the economic impact of the "high oil price + weak yen" combination following the escalation of the Middle East situation. According to your provided Refinitiv flash report, the Nikkei index closed down 0.1% at 53,751.15 points, having fallen by as much as 1.3% during the day; the TOPIX index closed down 0.5% at 3,610.73 points. Reuters reported on March 16 that as the Iran war entered its third week, the combination of high oil prices, a weakening yen, and slowing growth is increasingly alarming the Japanese market about stagflation risks.
Rising Concerns of Stagflation
The core of this adjustment is not merely risk aversion but Japan's particular sensitivity as an energy-importing nation to oil price shocks. Reuters' March 16 report stated that Brent crude rose to around $106.30 per barrel, a significant increase from less than $60 in January; meanwhile, the Bank of Japan is expected to keep short-term interest rates unchanged at 0.75% this week, but under the dual pressures of oil prices and exchange rates, the policy outlook has become more complex. For Japan, rising imported inflation combined with a slowdown in consumption and manufacturing activity is precisely the classic stagflation scenario the market fears.
Yen Approaches 160 Mark
The exchange rate is another crucial pressure point. Reuters reported on March 16 that Japanese Finance Minister Katsuyuki Katayama stated that as the yen approached the psychological barrier of 160 against the dollar, the government was prepared to take decisive action against sharp fluctuations in the foreign exchange and other financial markets. She also mentioned that G7 finance ministers expressed joint concerns over recent market volatility. While the yen's depreciation raises import costs, it also heightens worries over real income pressure and weakening domestic demand.
Sectoral Performance Divergence
From the market's perspective, there was no broad-based sell-off, but rather a clear divergence. Your flash report shows that among the Nikkei component stocks, 65 rose and 154 fell; Ibiden rose by 3.8%, and SCREEN Holdings rose by 3.7%; Tokyo Electric Power fell by 4.8%, and Isuzu Motors fell by 4.4%. This structure indicates that under macroeconomic pressure, investors prefer selective positioning rather than a complete withdrawal from Japanese equities. In line with Reuters' global market reports, current risk assets are in a "wait-and-see phase for policy meetings and clearer geopolitical dynamics."
