Japan Market start 2020 with heavy losses amid US-Iran tensions

The Japan share market closed session lower on the first trading day of 2020,Monday, 06 January 2020, as worried investors pulled money out from risky assets toward traditional safer havens on heightened geopolitical tensions after a US air strike killed a top Iranian military leader and the yen surged against the dollar. At closing bell, the 225-issue Nikkei Stock Average tumbled 451.76 points, or 1.91%, to 23,204.86, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 23.87 points, or 1.39%, at 1,697.49. Tokyo markets had been closed since Dec. 31 for the New Year's holidays.

Total 31 issues of the 33 industry category of Topix index dived into negative territory, with Marine Transportation, Air Transportation, Fishery, Agriculture & Forestry, Foods, and Warehousing & Harbor Transportation Services issues being notable losers.

 

Investors risk sentiments dampened on heightened geopolitical tensions after news that the U.S. military had killed Qassem Soleimani, the head of Iran's Islamic Revolutionary Guard's Quds Force. The strike also killed Abu Mahdi al-Mohandes, the deputy head of the Popular Mobilization Forces, which is an umbrella for dozens of militias that are part of the Iraqi security apparatus but include factions that swear allegiance to Iran's supreme leader.

Tensions in the Gulf region escalated with Tehran vowing to avenge the death of General Soleimani and its allies in Iraq pressing to expel US troops from the country. Iraqi Prime Minister Adel Abdul-Mahdi condemned the overnight strike, calling it a flagrant breach of the terms underwriting the presence of US forces in the country. Iran's supreme leader, Ayatollah Ali Khamenei, declared three days of mourning for Soleimani's death and said that a hard revenge awaits criminals, responsible for the attack.

Investors were concerned about worsening U.S.-Iran relations and monitoring how the tensions will escalate. Any move indicating a military clash would trigger further sell-offs in shares.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, appreciated against greenback and other major currencies on concerns over escalating tensions in the Middle East. The Japanese yen traded at 108.02 per US dollar after briefly sinking to around 107.80, a level not seen since early October, compared with 108.12 in New York on Friday.

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