Tech Stocks Tumble as Iran-Israel Strikes Renew Rate Fears

Asian stock markets fell sharply on Monday as investors reacted to a steep sell-off in U.S. technology shares and renewed fighting between Iran and Israel. South Korea’s benchmark KOSPI dropped 8.29 percent to close at 7,484.41, its largest decline since March, while Japan’s Nikkei 225 fell 3.9 percent. Indexes in Taiwan and Hong Kong also declined, though by smaller margins. The moves followed Friday’s losses on Wall Street, where the Nasdaq Composite fell more than 4 percent.

The immediate trigger was a hotter-than-expected U.S. jobs report for May that prompted analysts to push back expectations for Federal Reserve rate cuts. Goldman Sachs now forecasts the next two reductions in 2027. Strong employment data has reduced the likelihood that the central bank will ease policy soon, raising borrowing costs for companies that have driven much of the recent market gains. Semiconductor stocks were hit hardest. Samsung Electronics declined more than 10 percent and SK Hynix fell nearly 8 percent in Seoul. Taiwan Semiconductor Manufacturing and SoftBank also posted sizable losses.

These companies had benefited from enthusiasm over artificial intelligence spending. Samsung and SK Hynix each reached $1 trillion valuations in recent months, while SoftBank became Japan’s most valuable firm. Friday’s drop in the iShares Semiconductor ETF, its steepest in six years, reflected concerns that share prices had run ahead of earnings prospects. Monday’s trading showed continued rotation out of high-valuation tech names into more defensive sectors.

Geopolitical developments added to the pressure. Iran launched missiles at Israel on Sunday, and Israel responded with strikes on Iranian defense sites. Oil prices rose above $92 a barrel for West Texas Intermediate crude. President Donald Trump said both sides were seeking an immediate ceasefire, though markets remained sensitive to any sign that the fragile truce could unravel. Higher energy costs could feed into inflation readings, complicating the Fed’s task.

South Korean authorities intervened verbally after the won opened at a 17-year low against the dollar. The currency later recovered some ground. Trading volume on the KOSPI was heavy, with foreign and institutional investors net sellers and retail investors providing support. Circuit breakers halted trading briefly in Seoul for the second time this year.

European chip stocks showed mixed early moves before recovering, suggesting some stabilization. U.S. futures pointed to a modest rebound at the open, with Nasdaq contracts up roughly 1 percent in premarket indications. Micron Technology, which fell 13 percent on Friday, traded higher ahead of the bell.

The episode illustrates how interconnected markets have become around a narrow set of growth stocks whose valuations depend on sustained low rates and rapid AI adoption. A single strong employment report and a flare-up in the Middle East were enough to shift pricing across time zones. Policymakers in Washington will watch whether higher oil prices begin to appear in core inflation data due later this week. For now, the decline serves as a reminder that the path for monetary policy and corporate earnings remains more uncertain than recent rallies had implied.