Tech Stocks Tumble as Iran-Israel Strikes Renew Rate Fears

Asian equity markets opened sharply lower on Monday as investors absorbed Friday's steep losses on Wall Street and weighed renewed missile exchanges between Iran and Israel. South Korea's benchmark Kospi index fell 8.29 percent to close at 7,484.41 after triggering the exchange's circuit breaker early in the session. Samsung Electronics dropped more than 10 percent and SK Hynix fell nearly 8 percent, with the two companies accounting for over 40 percent of the index's weight. Japan's Nikkei 225 declined 3.9 percent, Taiwan's TAIEX slipped nearly 3 percent, and Hong Kong's Hang Seng Index eased 1.3 percent.

The immediate catalyst was a hotter-than-expected May U.S. jobs report that prompted traders to push back expectations for Federal Reserve rate cuts. Goldman Sachs economists revised their forecast to place the next two cuts in 2027 rather than this year. Higher-for-longer borrowing costs reduce the present value of distant earnings that many high-priced technology stocks rely upon for their valuations. Memory-chip makers and other AI-related names that had rallied aggressively in prior months led the retreat, with the Nasdaq Composite posting its largest single-day decline since April 2025.

Geopolitical developments added to the pressure. Iran launched missiles toward Israel on Sunday, prompting Israeli retaliation against Iranian defense sites. Oil prices rose more than 1 percent, with West Texas Intermediate briefly exceeding 92 dollars a barrel. President Trump stated that both sides appeared ready to observe an immediate ceasefire, though markets remain sensitive to any sign that energy supplies could be disrupted.

The Kospi's drop extended a three-day losing streak and erased much of the index's earlier 2026 gains. Foreign and institutional investors were net sellers, while individual investors provided some buying support. The Korean won recovered from an opening low after verbal intervention by financial authorities. In Taiwan, TSMC shares fell nearly 3 percent, and in Japan, SoftBank Group declined more than 6 percent.

Market moves reflect standard price discovery rather than systemic failure. Elevated valuations built on optimistic projections for artificial-intelligence revenue encountered concrete data on interest rates and corporate profitability. Strong U.S. employment figures indicate underlying economic resilience even as they alter the trajectory of monetary policy. Meanwhile, the flare-up between Iran and Israel underscores how fragile diplomatic arrangements can quickly affect commodity prices and investor risk appetite.

European chip stocks showed mixed early trading before recovering modestly, suggesting the selloff may be concentrated in names that had advanced furthest on AI narratives. Futures on the Nasdaq pointed higher ahead of Monday's open, indicating potential stabilization once the immediate reaction subsides. The episode illustrates how markets rapidly incorporate new information on policy expectations and geopolitical risk without requiring external direction.