Nikkei 225 Hits Lowest Since June as Tech Stocks Plunge

The Nikkei 225 dropped more than 4% on Monday in Tokyo, trading at its lowest level since June 11, as losses in technology names led the decline.

SoftBank shares fell about 9%, Kioxia Holdings declined roughly 16%, Tokyo Electron slid 8% and Advantest lost 7.2%. Kioxia’s stock has fallen about 55% from its peak earlier this year and the company has moved from the top position by market value in Japan to sixth place.

Investor sentiment weakened after a weekend escalation between the United States and Iran. Two US service members were reported killed and US strikes on Iranian targets reportedly left dozens dead, raising concerns about a wider regional confrontation. US officials signaled potential targeting of Iranian power and bridge infrastructure, and Iran warned of retaliatory strikes on similar infrastructure. Reports indicated Iranian forces struck a desalination plant in Kuwait following a US attack on a comparable facility inside Iran.

Crude oil prices rose on the news, with Brent near $90 a barrel and West Texas Intermediate around $85. Market participants noted Japan’s heavy dependence on Middle East crude, and analysts warned that sustained higher oil prices could boost inflation and increase pressure on the Bank of Japan to consider tighter policy. Japanese government bond yields rose in response to the geopolitical shock.

Technical indicators showed additional pressure on the index. The Nikkei moved from a year-to-date high of 72,845 to about 64,140 and traded below its 50-day exponential moving average. The index also fell below the lower trendline of a previously rising pattern, while momentum indicators including the Relative Strength Index and MACD remained weak.

Developments in the broader technology sector added to volatility. Chinese AI developers reported recent model advances, with one firm preparing for a Hong Kong listing, and other local startups announcing progress in AI capabilities. Market participants cited competitive gains in China’s AI sector as a factor weighing on semiconductor and equipment names.

Investors are watching upcoming US corporate results for signals on capital spending and demand. Alphabet and Tesla are due to report earnings this week; Microsoft, Amazon and Meta are scheduled to report next week. Traders said markets will stay sensitive to further developments in the Middle East and to the tone of US tech earnings, both of which could influence near-term selling pressure.