Middle East War Drives Japan's Triple Market Slump

This downturn is directly attributed to Japan's approximately 95% dependency on Middle Eastern crude oil imports, leading to soaring crude oil prices. The Nikkei index closed at 50,936, down 4.57% from the previous session, after reaching a record high of 58,850 in February.

Major companies like Toyota Motor fell over 6%, and SoftBank Group plunged over 9%. Yen weakness, reaching its highest level in 1 year and 8 months, is fueled by expectations of a widening trade deficit, prompting Vice Finance Minister Atsushi Mimura to warn of potential "decisive action" for yen-buying intervention.

Inflation concerns from higher oil prices and expectations for an early Bank of Japan policy rate hike have pushed the 10-year JGB yield to 2.39%, its highest since February 1999. The Bank of Japan's re-estimate of the output gap supports an earlier rate hike, with markets anticipating action as early as April.

Japan's Cabinet Office estimates a negative economic impact of up to ¥15 trillion if resource prices jump 80% year on year.