Investors in Tokyo remained on edge for a second straight day amid ongoing US-Israeli strikes on Iran, causing Japan's Nikkei share average to fall. Rising crude oil futures and a weaker yen fueled concerns over accelerating inflation. This uncertainty weighed on the equity market overall.
On March 3, 2026, in Tokyo, Japan's Nikkei share average (.N225) fell 1.2% to 57,384.38 as of 0135 GMT. The broader Topix index (.TOPX) also declined 1.2% to 3,850.48.
Maki Sawada, a strategist at Nomura Securities, said, “Ongoing gains in crude oil futures on worsening Middle East tensions, together with a stronger U.S. dollar and weaker yen, are fueling views that inflation could accelerate. This uncertainty, seen as potentially impacting future monetary policy, is weighing on the equity market overall.”
The U.S.-Israeli air war against Iran showed no end in sight, with Israel striking Lebanon in response to Hezbollah attacks. Tehran continued launching missiles and drones at Gulf states hosting U.S. military bases.
The transport equipment sector (.ITEQP.T) and the oil and coal sector (.IPETE.T) each slipped 3.9%. Toyota Motor (7203.T), the world’s largest automaker by sales, fell 5.5%, while Japan’s largest airline, ANA Holdings (9202.T), lost 2.2%. ENEOS Holdings (5020.T), Japan’s biggest refiner, dropped 4.3%, its sharpest decline since November last year.
Unrelated to Middle East tensions, Sumitomo Pharma (4506.T) tanked 15% as investor concerns over a new share issuance outweighed an upward revision to its full-year net profit forecast. On the Nikkei index, there were 194 decliners against 30 advancers.
