Asian Markets Plummet: Nikkei Falls 3%, Kospi Drops 8% Amid Escalating US-Iran Tensions and Oil Price Surge

Global Markets Tumble as Investors Book Profits in Technology Stocks

Asian markets experienced a sharp decline on Monday, 8 June, as investors sought to capitalize on profits in technology stocks, leading to a significant pullback in the artificial intelligence-driven rally that had propelled global equities to record highs.

The South Korea's KOSPI, heavily weighted towards semiconductor and technology companies, plummeted more than 6.8% in volatile trading, prompting a temporary 20-minute trading halt. The index has now fallen approximately 14% from last week's record peak. Japan's Nikkei 225 also came under pressure, dropping 3.4% in early trade.

Meanwhile, US stock futures attempted a modest recovery after a steep selloff on Wall Street at the end of last week. Investor sentiment was further rattled by renewed geopolitical tensions after Israeli strikes on Beirut pushed oil prices and the US dollar higher, adding to concerns over inflation and global economic growth.

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The weakness followed Friday's sharp decline in US markets, where the Nasdaq Composite slumped 4.2% after stronger-than-expected jobs data reinforced expectations that the Federal Reserve may keep interest rates elevated or consider further tightening, weighing heavily on high-growth technology stocks.

Key Economic Indicators

The week ahead is headlined by the giant SpaceX listing, expected to price on Thursday and trade on Friday, but will also have inflation in focus with US consumer price data due on Wednesday and central bank meetings in Canada and Europe. Last week, bitcoin notched its heaviest weekly drop since the collapse of crypto exchange FTX in late 2022, falling approximately 16%. It was hovering just shy of $63,000 on Monday.

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SpaceX's debut is expected to be followed by other mega IPOs in the coming months from Anthropic and OpenAI, raising so much money that brokers are nervous it could draw down other assets. The market regime has potentially shifted from moderate inflation and rate cuts to potential 'overheating' contributing to higher Treasury yields, a higher path of short-term interest rates and tighter liquidity.

In currency trade, the dollar was firm and holding above 160 yen, pushing the Australian dollar to $0.7055. The euro hovered at $1.1531.