The Nikkei stock index plunged nearly 3 percent on Monday, ending at its lowest level in about 16 months, amid fears over higher fuel costs as the United States and its European partners are in discussion about the idea of banning Russian oil imports in the wake of Moscow’s onslaught on Ukraine.
The 225-issue Nikkei Stock Average ended down 764.06 points, or 2.94 percent, from Friday at 25,221.41, its lowest closing level since Nov. 10, 2020. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 50.91 points, or 2.76 percent, lower at 1,794.03.
“Investors are fleeing risks as there has been no good news regarding the situation in Ukraine,” said Shingo Ide, chief equity strategist at NLI Research Institute.
Crude oil futures jumped after US Secretary of State Antony Blinken said in an interview with CNN on Sunday that Washington is talking with its European partners and allies to “look in a coordinated way” at the prospect of an oil import ban from Russia, a major producer.
West Texas Intermediate crude futures for April briefly topped $130 per barrel in New York during after-hours trading on Sunday, hitting their highest level since late July in 2008.
On the Tokyo Commodity Exchange, Middle East crude oil futures briefly hit 78,820 yen per kiloliter, the highest level since late August in 2008.
Meanwhile, growing demand for the perceived safety of gold amid the ongoing conflict in Ukraine also lifted the price of the asset sold by Tokyo’s Tanaka Kikinzoku Kogyo KK, a major precious metal firm, to a record-high 8,109 yen per gram.
“Blinken’s comments triggered worries that higher oil prices could help cool off the economy,” Ide said, noting that higher oil prices could affect companies and households.
The euro briefly dropped to the upper 124 yen range, its lowest level since December 2020, as investors sold the unit on fears over escalating tensions over the Ukraine crisis, dealers said.
At noon, the euro was quoted at $1.0844-0848 and 124.61-69 yen against $1.0928-0938 and 125.42-52 yen in New York and $1.1012-1014 and 127.14-18 yen in Tokyo at 5 pm Friday.
The dollar fetched 114.91-94 yen compared with 114.60-70 yen in New York and 115.45-46 yen in Tokyo late Friday afternoon.
Tokyo stocks sank from the outset, with the Nikkei briefly nosediving nearly 1,000 points as investors unloaded a wide range of shares on escalating fears over Russia’s military attacks on Ukraine and their impact on the global economy.
The market could continue to be volatile this week depending on new developments regarding the situation in Ukraine amid deepening uncertainties, brokers said.
Market participants are monitoring developments regarding the third round of cease-fire talks between representatives of Ukraine and Russia, expected to take place later Monday, brokers said.
On the First Section, declining issues outnumbered advancers 1,924 to 213, while 43 ended the morning unchanged.
Decliners were led by air transportation, transportation equipment and machinery issues.
Air transportation issues fell on rising fuel prices as well as concerns over the impact of the Ukraine crisis on air travel. Japan Airlines lost 167 yen, or 7.8 percent, to 1,972 yen and ANA Holdings dropped 126.0 yen, or 5.3 percent, to 2,253.5 yen.
Rubber product issues plunged on worries that higher raw material costs would adversely impact the industry’s revenues. Toyo Tire sank 145 yen, or 9.8 percent, to 1,339 yen, and Bridgestone fell 206 yen, or 4.6 percent, to 4,248 yen.