Asian equity markets declined sharply on Monday as investors reacted to mounting geopolitical tensions surrounding the U.S.-Israel conflict with Iran, while hawkish signals from the Bank of Japan added further pressure on regional sentiment. The selloff was broad-based, though Japanese and technology-heavy markets bore the brunt of the losses.
Japan's Nikkei 225 and TOPIX indexes each tumbled more than 3%, making them the worst performers across the region. The steep decline followed comments from BOJ Governor Kazuo Ueda, who addressed parliament and emphasized the central bank's close monitoring of yen movements. Ueda warned that a persistently weak yen could drive up import costs and potentially trigger additional interest rate increases, reinforcing expectations of a tighter monetary policy ahead.
Asian technology stocks also came under significant pressure, mirroring losses on Wall Street driven by profit-taking and growing skepticism around artificial intelligence demand. South Korea's KOSPI shed roughly 3%, while Hong Kong's Hang Seng fell approximately 1%. Samsung Electronics and SK Hynix — two of the world's largest memory chipmakers — dropped 2.5% and 4.8%, respectively, after Google unveiled a new data compression algorithm that raised concerns about future AI-driven memory chip consumption.
Geopolitical uncertainty continued to weigh on investor confidence across the board. Although U.S. President Donald Trump stated that negotiations with Iran were progressing and that a deal could be near, markets remained cautious. The situation grew more complex over the weekend when Yemen's Houthi group, backed by Iran, launched attacks on Israel, potentially widening the regional conflict.
Rising oil prices compounded concerns, stoking fears of energy-led inflation and broader economic disruption. Other regional markets posted modest declines, with Australia's ASX 200 falling 0.8% and India's Nifty 50 dipping by a similar margin, while China's major indexes traded within a narrow range.


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