Asia’s leading stock indices suffered their steepest falls in months on Monday, as a technology-led rout that began on Wall Street rippled across the Pacific and was compounded by a surge in oil prices following Israeli airstrikes on Iran. The Kospi index in Seoul fell 4.7 per cent, briefly plumbing an intraday loss of 8 per cent, while Tokyo’s Nikkei 225 dropped 4.2 per cent and Taiwan’s benchmark slid 3.9 per cent. The sell-off was sparked by two events late last week: a gloomy outlook from chipmaker Broadcom and a stronger-than-expected US jobs report that fuelled bets on further monetary tightening.

Wall Street had set the tone on Friday, when the Nasdaq Composite endured its worst session since April 2025, tumbling more than 4 per cent. The S&P 500 shed 2.6 per cent and the Dow Jones Industrial Average lost 1.35 per cent, as investors rushed to offload richly valued Big Tech stocks that had been buoyed by exuberance over artificial intelligence. The rush out of risk assets also hammered cryptocurrencies, with bitcoin falling sharply. For many analysts, the retreat reflected a growing unease that AI-driven gains may have run ahead of fundamentals and that the Federal Reserve, confronted with stubborn inflation and a resilient labour market, will be forced to keep interest rates elevated.

The shockwaves were felt most acutely in Asia’s export-reliant and semiconductor-heavy markets. In Seoul, the Kospi’s decline extended its drop from a record high set just a week earlier to 13 per cent, underscoring the volatility of a rally built on the global chip cycle. Tokyo’s losses were exacerbated by a downward revision to Japan’s first-quarter growth, to an annualised 1.8 per cent from a preliminary 2.1 per cent, reminding investors of the fragility of the domestic recovery. Taiwan, home to the world’s largest contract chipmaker, was also swept up in the selling as foreign investors pared positions.

Compounding the risk-off mood, oil prices jumped in early Asian trading after Israel launched airstrikes targeting central and western Iran in retaliation for missile fire. The sudden spike added an unpredictable geopolitical dimension to a market already reeling from a reappraisal of tech valuations. Viewed from trading desks in London and Singapore, the simultaneous blow from monetary policy anxiety and Middle Eastern tension created a near-perfect storm for a sharp correction.

Whether this marks the beginning of a deeper reset or a temporary purge of speculative excess remains the pivotal question. Some fund managers in Hong Kong argue that the sell-off is a healthy unwinding of overbought conditions in AI names, while others warn that the combination of tightening liquidity and a more dangerous geopolitical landscape could make this the start of a more painful repricing. As the week unfolds, much will depend on whether central bank rhetoric and oil markets offer any respite — or add fuel to the fire.