Nikkei Leads Asian Stocks Amid Middle East Ceasefire Doubts

Tokyo’s Nikkei 225 dropped 1.9% on Tuesday, leading losses across the region. The MSCI Asia-Pacific ex-Japan index slipped about 0.6%. South Korea’s KOSPI fell as much as 3.3% in a volatile session, and S&P 500 e-mini futures pointed to a softer start on Wall Street.

Traders cited doubts over a Middle East ceasefire and renewed Iran-related tensions as triggers for risk reduction and profit-taking after a recent rally in technology stocks. An IG analyst in Sydney characterized the action as profit-taking rather than a re-rating of the artificial intelligence trade.

Brent crude eased 0.6% to $94.45 a barrel following reports of a limited ceasefire between Hezbollah and Israel. Oil had risen earlier on reports that Tehran paused indirect talks with the United States.

Parts of the technology sector held up. Chip and hardware suppliers in Asia received buying interest after Anthropic filed confidentially for a U.S. IPO and Alphabet said it plans to raise about $80 billion through equity offerings, including an investment from Berkshire Hathaway, to fund AI infrastructure.

South Korea’s inflation rate accelerated in May to its highest level in over two years, increasing expectations that the Bank of Korea may raise interest rates next month. That helped drive swings in rate-sensitive sectors and large tech names such as Samsung Electronics and SK Hynix.

U.S. economic data provided an additional reference point for investors. The S&P 500 closed higher on Monday after the ISM manufacturing purchasing managers’ index rose to 54.0 in May from 52.7, its strongest reading in four years. David Rosenberg of Rosenberg Research described the U.S. equity market as in “boom mode” and noted a nine-week winning streak.

Asian markets showed selective buying in AI-related stocks while broader indices retreated during Tuesday’s trading.