Japan’s Nikkei share average ended its five-day winning streak on Tuesday, as a stalemate in the Middle East conflict led to an increase in oil prices, reigniting concerns regarding bond market risks and inflation. The Nikkei declined by 2.5 percent, concluding at 67,460.73, following a 5.5 percent increase over the preceding five trading sessions. The broader Topix experienced a decline of 1.1 percent, settling at 4,140.22. A temporary ceasefire between the US and Iran expired this week, with Washington ruling out extending the deal and Tehran indicating it would transition to a “fully offensive” military posture.

Crude oil prices increased as traffic through the vital Strait of Hormuz shipping corridor came to a standstill once more. Additionally, worries regarding global inflation led to a rise in bond yields, reaching multi-decade highs, particularly in Japan. “Rising interest rates tend to highlight the relative overvaluation of share prices,” said Wataru Akiyama. “Underlying concerns regarding persistently high inflation – which are present in both Japan and the US – could well act as a drag on the stock market going forward.”

Growth stocks experienced significant selling pressure, with electrical appliance manufacturers emerging as the weakest sector among the 33 industry groupings on the Tokyo Stock Exchange, declining by 3.7 percent. The sub-index encompasses chip-making tool manufacturer Tokyo Electron and chip-testing equipment maker Advantest, which experienced declines of 6.2 per cent and 5.1 per cent, respectively. Simultaneously, shipping stocks gained from anticipations of increased freight rates, with marine transport emerging as the top-performing sub-index, surging by 3.6 percent.