Japan’s Nikkei 225 Rebounds on Tech Strength and Oil Price Drop

Japanese equities reversed earlier losses, with the Nikkei 225 posting a strong rebound of 2.3% to settle at 39,847.65. The rally was propelled by a broad-based advance in technology stocks, where major firms including TSMC Japan and Sony Corp. gained over 4% each. The shift in sentiment followed a significant drop in global crude oil prices, with West Texas Intermediate (CL=F) futures falling 6.8% to $73.20 per barrel, the lowest level since early February. The decline in oil prices eased concerns over inflationary pressures that had dampened market sentiment after US-Israeli military actions against Iran in late February. That event had triggered a spike in crude prices and a spike in the CBOE Volatility Index (VIX), which peaked at 29.4 on March 5. By March 10, the VIX had retreated to 18.7, signaling a return to risk-on trading. Lower oil costs also support consumer spending and reduce input costs for energy-intensive industries, benefiting both tech and industrial sectors. The rebound was not limited to tech. Energy-sensitive stocks in the industrials and transportation sectors saw gains, with Mitsubishi Heavy Industries rising 3.5% and Japan Airlines adding 2.9%. The broader market’s recovery reflects a shift from defensive to growth-oriented positioning, with foreign institutional investors reportedly net buying 128 billion yen in Japanese equities over the past three trading days. Market analysts note that the Nikkei’s performance has now reclaimed all ground lost since the February 25 geopolitical shock, underscoring the market’s sensitivity to both energy price trends and global risk sentiment. The recovery in Japan’s benchmark index now positions it within 1.1% of its all-time high, set in late 2023.