The Nikkei 225 Index tumbled about 5% to below 50,600 on Monday, marking its lowest level of the year as intensifying Middle East tensions and surging oil prices continued to pressure global equities. The war involving Iran has entered its fifth week with no resolution in sight, as Iran-backed Houthi militants in Yemen have joined the conflict and the United States has deployed additional troops to the region.
Japan, grappling with the resulting energy shock, is preparing to release oil from its emergency reserves in an effort to soften the blow. Investors are also contending with a sharply weaker yen and rising Japanese government bond yields, developments that have heightened speculation that the Bank of Japan could raise interest rates as early as next month.