Nikkei drops over 2% amid Middle East tensions and Strait of Hormuz closure

The Nikkei index, Tokyo's primary stock market indicator, experienced a significant drop of over 2% during the opening of Thursday's trading session. This decline was primarily triggered by renewed geopolitical tensions in the Middle East, following Iran's announcement of closing the strategic Strait of Hormuz.

By the first half-hour of trading, the Nikkei, which comprises 225 representative stocks, had fallen by 2.11%, equating to 1,351.32 points, settling at 62,827.95. The broader Topix index, including the largest capitalization firms, also saw a decrease of 1.79%, or 68.85 points, reaching 3,778.75 units.

The downward trend on the Tokyo Stock Exchange occurred amidst escalating tensions between the United States and Iran. While Tehran claimed to have reopened the Strait of Hormuz, the U.S. military asserted that the passage remained active. This uncertainty impacted investor confidence.

Several key sectors experienced notable losses. In the semiconductor industry, Advantest saw a contraction of 3.39%, while Disco fell by 3.8%. Tokyo Electron also declined by 1.34%. The telecommunications and investment group SoftBank, known for its substantial investments in artificial intelligence, particularly with OpenAI, plummeted by 4.88%.

Companies involved in the automotive sector also faced pressure. Nissan's stock fell by 1.9%, Toyota decreased by 2.13%, and its rival Honda dropped by 2.54%. Fujikura, a manufacturer of electrical cables for data centers that had benefited from the AI enthusiasm, saw its stock reduce by 4.84%.