Tokyo stocks are expected to remain highly sensitive to developments surrounding Iran in the coming week, with equity indices also likely to be influenced by news linked to artificial intelligence and semiconductor sectors, Jiji Press reports.

Over the previous week, the benchmark Nikkei 225 fell 249.58 points, or 0.47%, to close at 53,123.49 on April 3.

The index dropped by around 2,300 points across March 30 and 31, pressured by declines in US equities late the previous week and rising crude oil prices. On April 1, however, it rebounded by more than 2,600 points amid expectations of a potential de-escalation in Middle East tensions ahead of a speech by US President Donald Trump. Those gains proved short-lived, however, as disappointment following the address pushed the Nikkei back below the 53,000 level.

As such, for the coming week, market participants cited by Jiji Press expect the Nikkei to trade within a range of 52,000 to 54,000.

Much of this centres on the fact that uncertainty surrounding Iran remains elevated. The US has set a deadline of late April 6 US time for Iran to permit the resumption of shipping through the Strait of Hormuz with President Trump over the weekend showing his frustration in an expletive heavy social media post that has since made headlines around the world. Should Iran fail to comply, Washington has indicated the possibility of continued military action within the next two to three weeks.