Asian stock markets traded mixed on Monday, with Japanese equities extending losses as investors weighed rising geopolitical tensions in the Middle East alongside persistent concerns over valuations in artificial intelligence-linked technology stocks.
Japan's Nikkei 225 fell 4.03%, South Korea's Kospi slipped 0.38%, while Australia's ASX 200 edged 0.30% higher.
Investor sentiment remained fragile after the conflict in the Middle East intensified, driving oil prices sharply higher and adding to concerns over inflation and global growth. Brent crude climbed as much as 3.8% to trade above $91 a barrel, its highest level since June, as exchanges of strikes broadened beyond military targets.
The latest escalation comes as markets were already grappling with a prolonged retreat in technology shares. Investors have become increasingly cautious about whether the heavy spending on artificial intelligence can generate returns that justify elevated valuations, prompting another round of selling in chipmakers.
The stronger demand for safe-haven assets also supported the U.S. dollar against most major currencies. Treasury futures weakened, pushing the implied yield on the benchmark 10-year note higher, although cash trading in U.S. Treasuries was closed during Asian hours because of a holiday in Japan.
The combination of geopolitical uncertainty and concerns over the outlook for technology earnings has kept investors on the defensive. Market participants are now watching whether higher energy prices and continued volatility in AI-related stocks will weigh further on global risk appetite in the days ahead.
(With inputs from Bloomberg.)
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