Japan stocks slide as Middle East tensions weigh on sentiment

Japanese stocks fell on Monday, with the Nikkei 225 declining 1.92% and the broader Topix Index losing 0.71%, as escalating tensions in the Middle East dampened investor sentiment. Rising concerns over the conflict between the US and Iran pushed oil prices higher, keeping inflation risks and expectations of further interest rate hikes in focus.

The latest exchange of missile strikes between the US and Iran, along with continued uncertainty over shipping through the Strait of Hormuz, raised concerns about potential disruptions to global energy supplies. Higher oil prices added to worries about rising costs and their impact on the economy.

Investors also remained cautious ahead of a busy week of corporate earnings in the US. The results are expected to provide insight into whether the recent rally in technology and artificial intelligence-related stocks can be supported by strong company performance.

Technology shares led the losses in Japan, with heavy selling in chipmakers and AI-related companies. Kioxia Holdings, Murata Manufacturing, Taiyo Yuden, Tokyo Electron, and Advantest were among the biggest decliners.

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