Nikkei Retreats as Middle East Tensions Spike Oil Prices

The Nikkei 225 index closed lower on Thursday, ending a three-day rally that had previously pushed the market to fresh record highs. The index fell 445.63 points, or 0.75%, to finish at 59,140.23, as investors reacted to heightened volatility in global energy markets and a soft lead from U.S. bourses. The downturn was driven largely by surging crude oil prices following reports of increased tensions in the Middle East. Market sentiment soured after President Donald Trump issued orders to the U.S. Navy to engage vessels placing mines in the Strait of Hormuz. With the Strait remaining closed, supply concerns have pushed West Texas Intermediate (WTI) crude for June up 2.68% to $95.45 per barrel. Japanese automotive giants were hit particularly hard by the volatility. Toyota Motor fell 2.13%, Nissan Motor dropped 2.23%, and Mazda Motor retreated 1.64%. The financial sector also saw declines, with Mizuho Financial and Sumitomo Mitsui Financial falling 1.98% and 1.69%, respectively. In contrast, Softbank Group and Hitachi managed gains of 3.86% and 3.36%. The weakness in Tokyo mirrored a broader global trend. U.S. markets closed in the red, with the NASDAQ falling 0.89% and the S&P 500 losing 0.41%, partly due to profit-taking and a cautious outlook on IBM's full-year guidance despite beating first-quarter earnings expectations. Analysts expect continued selling pressure on the Nikkei as Asian markets open under the shadow of energy instability.