Japanese shares drop sharply as Middle East conflict weighs on sentiment: analyst

Japanese shares closed sharply lower Monday, with the Nikkei 225 plunging 3.9 percent to around 64,000 points as investors sold off heavyweight technology stocks, said Timothy Pope, a market analyst for China Global Television Network (CGTN).

Analysts said the drop, which briefly exceeded 4 percent intraday, reflected profit-taking after recent gains and mounting concerns over U.S. rate hikes and the Middle East conflict.

The 225-issue Nikkei Stock Average ended down 2,563.52 points, or 3.85 percent, from Friday at 64,024.60.

The broader Topix index finished 96.71 points, or 2.45 percent, lower at 3,852.38.

Artificial intelligence- and semiconductor-related shares led the decline, tracking Wall Street losses late last week amid growing expectations of a U.S. Federal Reserve rate hike later this year. Lingering uncertainty over the Middle East conflict also weighed on market sentiment.

Despite the Nikkei posting its fourth-largest intraday point drop on record, analysts said the move was more likely a temporary pullback following the recent rally, as growth hopes for the technology sector remain intact.

Pope noted that the tech slide coincided with fresh missile strikes by Israel and Iran, raising worries over higher fuel costs for energy‑import dependent Japan.

"Over in Tokyo the Nikkei 225 shed 3.9 percent to close back around 64,000 points. For the Nikkei the tech slump coincided with more missile strikes by Israel and Iran in the Middle East. For energy import dependent Japan, we are seeing the prospect of still higher fuel costs and that sent government bonds lower. The Japanese Yen also remains around 160 per dollar, which makes currency intervention a real worry for the markets as well. And despite the healthy real wage growth data out of Japan last week, the first quarter GDP was revised down today thanks to weak capital expenditure from businesses," said Pope.

Japanese shares drop sharply as Middle East conflict weighs on sentiment: analyst

A senior official from China's State Taxation Administration on Tuesday reported major improvements in taxpayer convenience and a surge in overseas tourists using China's departure tax refund service in the first six months of this year.

Rong Hailou, chief economist and spokesman for the State Taxation Administration, made the remarks during a press conference held by the State Council Information Office in Beijing to outline tax reform and development during the 15th Five-Year Plan period (2026-2030).

He said the fully digitalized electronic tax bureau is now widely accessible. He noted that most high‑frequency tax services, including routine filing, invoice issuance, social security fee refunds, and personal contribution record inquiries, can now be handled online or via mobile devices.

The coverage of intelligent tax services has reached 85 percent, reducing average processing time by 20 percent, he said.

"We have piloted the 'instant invoicing upon payment' initiative in sectors closely related to people's daily lives, including parking lots, retail supermarkets, and hospitality services such as catering and accommodation, thereby improving the efficiency and user experience of invoice collection for consumers. We have also continued to refine the 'immediate tax refund' service for overseas tourists departing China. In the first half of the year, the number of overseas tourists using the tax refund service increased by 366 percent year-on-year, while the sales value of tax-refundable goods and the corresponding tax refund amount both rose by 69 percent," he said.

China posts tax service improvements, tourist refunds surge: official