Indonesian markets came under heavy pressure as escalating Middle East tensions triggered fresh capital outflows, pushing the rupiah to historic lows and sending equities toward bear-market territory. Key Takeaways Rupiah falls past Asian Financial Crisis levels Jakarta Composite Index drops 5%, nearing bear market Oil surge adds inflation pressure to net oil importer Investor confidence already shaken by ratings outlook cuts Rupiah Breaks Historic Support Indonesian rupiah weakened 0.6% to 17,015 per US dollar, slipping below its January record low and breaching levels last seen during the Asian Financial Crisis. The currency is now down 1.8% year-to-date, ranking among Asia’s worst performers. Key Point: The rupiah’s break below crisis-era levels signals deep investor anxiety. Stocks Slide Toward Bear Market Jakarta Composite Index tumbled 5%, putting the benchmark on track to enter a bear market (down 20% from recent highs). Indonesia’s equities are also...
Japanese equities suffered their worst selloff since April, as surging oil prices and intensifying Middle East tensions rattled investors already shaken by weak US jobs data.
Key Takeaways
Nikkei 225 fell as much as 6.9% — biggest drop since April
Oil surged above US$110 per barrel
Japan highly vulnerable due to 90% oil import reliance
Market now in technical correction territory (down over 10% from recent peak)
Japanese Stocks Hit Hard
Nikkei 225 plunged up to 6.9%
TOPIX fell as much as 5.7%
Tech and electronics names led declines:
SoftBank Group Corp
Advantest Corp
The selloff comes after oil surged past US$110, as major producers curb output and conflict around Iran enters its ninth day.
Key Point: Oil above US$110 is triggering sharp risk-off moves in energy-import dependent markets like Japan.
Why Japan Is Especially Exposed
Japan imports roughly 90% of its oil from the Middle East, making it one of the most vulnerable economies to supply shocks.
Higher oil means:
Rising import costs
Pressure on corporate margins
Weaker consumer spending
Increased inflation risk
Strategists warn Japan is “among the most affected countries globally” from sustained oil spikes.
From Outperformer to Correction
The decline is particularly striking given Japan’s strong start to 2026.
Under Prime Minister Sanae Takaichi’s expansionary fiscal policies, the Nikkei had outperformed major global peers earlier this year.
Now:
The index has fallen more than 10% from late-February highs
That places it in technical correction territory
Foreign investors — previously strong buyers — appear to be reversing short-term positions.
US Data Adds to Pressure
Friday’s US payrolls report showed unexpected job losses, worsening sentiment.
If oil remains above US$100, strategists warn:
US stocks may come under renewed pressure
That could spill over into Asia
Near-term headwinds for Japan may intensify
Bottom Line
Japanese equities are highly sensitive to oil shocks.
With crude above US$110 and geopolitical tensions unresolved, markets are pricing in:
Higher inflation risks
Slower global growth
Delayed policy easing
If oil stays elevated, Japan could remain one of the hardest-hit developed markets.
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