Nikkei 225 Index drops over 700 points amid inflation fears

The Japanese stock market saw a significant decline on Monday, with the Nikkei 225 Index dropping over 700 points to settle below the 27,000 mark. This comes after a holiday on Friday and follows a series of gains in the previous three sessions. The drop was largely attributed to negative signals from Wall Street, where major U.S. indices fell sharply due to concerns over inflation data and rising tensions regarding a potential Russian invasion of Ukraine.

Market sentiment in Japan was further dampened by lingering worries over domestic coronavirus cases, despite a steady decline in new infections reported over the weekend. The Nikkei 225 Index was down 717.48 points, or 2.59 percent, closing at 26,978.60 after hitting an intraday low of 26,947.65. Prior to this, Japanese shares had experienced modest gains on Thursday.

Several prominent companies contributed to the market's downturn. SoftBank Group saw its shares decline by more than 4 percent, while Fast Retailing, the operator of Uniqlo, fell by over 3 percent. Among automakers, Honda reported a loss of more than 1 percent, and Toyota slipped nearly 4 percent. In the tech sector, major players like Advantest and Tokyo Electron also faced declines, with losses exceeding 4 percent and nearly 2 percent, respectively.

In contrast, a few stocks saw gains amid the broader market decline. Inpex surged more than 6 percent, while Toho Zinc and Citizen Watch gained almost 5 percent and over 4 percent, respectively. The U.S. dollar traded in the lower 115 yen range, reflecting ongoing volatility in the currency market. As traders assess global economic conditions and geopolitical tensions, the future direction of the Japanese market remains uncertain, with continued fluctuations likely in the coming days.