On March 4th, the Nikkei 225 average in Tokyo’s stock market experienced a sharp, consecutive decline, closing at 54,245 points, down 2033 points (3.61%) from the previous trading day. The intraday drop exceeded 2600 points at one point. Global stock markets were further impacted by concerns about a potential attack on Iran by the United States and Israel. Japan, an energy importer, was particularly affected, with markets worried that rising oil prices would drag down its economy. The Japanese stock market, which had been performing strongly since the beginning of the year, was now facing a test against the backdrop of expectations surrounding Prime Minister Sanae Takaichi’s economic policies.
On March 2nd, US President Trump stated regarding military action against Iran, “It doesn’t matter how long it takes,” hinting that the operation might exceed the initially anticipated four to five weeks. This led to a sharp drop in major European and American stock indices on March 3rd. European markets even saw a “triple whammy” of falling stocks, bonds, and currencies.
In addition, the Israeli military announced a large-scale strike on Tehran, the Iranian capital, on March 3, and reportedly attacked the facilities of the “Conference of Experts,” which is responsible for selecting the successor to Iran’s Supreme Leader Khamenei, leading to continued instability. On March 4, risk aversion among investors in the Tokyo market intensified, resulting in a sell-off of not only stocks but also the yen.