Asian markets closed mixed on Monday as investors rotated away from semiconductors and artificial-intelligence-related stocks following record gains on Friday. In commodities and FX, oil prices slid, bond yields eased, and the U.S. dollar weakened after President Donald Trump said an Iran-related agreement is “close” and a large-scale strike had been called off, renewing focus on diplomacy.
The shift toward risk balance was uneven across the region: Japan was pressured by a stronger yen after coordinated intervention, while Alibaba shares rallied on the launch of a new AI model. Elsewhere, sentiment was supported by optimism around peace talks and the prospect of reduced geopolitical escalation.
Key takeaways
- Stocks: South Korea’s Kospi sank 5.12% and Japan’s Nikkei slid 0.94% as semiconductor and electronics shares fell after Friday’s steep rally.
- Oil and rates: Brent crude fell about 5%, bond yields dipped, and the U.S. dollar eased after Trump signaled progress toward an Iran deal.
- FX impact: The yen surged on reported Japan-U.S. coordinated yen-buying intervention, lifting pressure on Japanese exporters.
- Corporate catalyst: Alibaba shares jumped 7% after the company unveiled its largest and most capable AI model, Qwen3.8-Max.
- Implication: Investors appeared to balance easing near-term geopolitical risk against still-sensitive rate expectations and currency-driven volatility.
What drove the move
Friday’s strong rebound in global equities set the stage for profit-taking in Asia’s high-beta corners. Semiconductor and AI-adjacent names came under selling pressure after record gains, with the unwind most visible in South Korea and Japan.
Geopolitics also played a role. Brent crude dropped about 5%, helping reduce inflation and growth concerns tied to energy prices. The move followed signals from Trump that he had held off on a fresh attack on Iran and that an agreement was close. According to the statements relayed in the report, a planned large-scale strike was called off on the condition that efforts to quickly reach an agreement to reopen the Strait of Hormuz and address the impasse over Iran’s nuclear capabilities continue.
In currency markets, the yen strengthened sharply. The report said Japan and the United States conducted coordinated yen-buying intervention and pledged they will not hesitate to take additional action. While Trump described the intervention as a “signal of friendship,” Japan’s finance minister, Satsuki Katayama, warned that authorities would step in again if volatility persists.
Market reaction across Asia
Japan: The Nikkei average fell 0.94% to 63,754.90 after reaching a one-week high in the prior session. The broader Topix index ended 1.08% lower at 3,960.03, with electronics and auto stocks weighing on performance. Murata Manufacturing and Toyota Motor each fell by more than 3%, reflecting the combined impact of profit-taking and a stronger yen.
South Korea: Seoul shares moved sharply lower as semiconductor heavyweights retreated after their surge on Friday. The Kospi index plunged 5.12% to 6,257.45, after climbing nearly 18% on Friday. SK Hynix and Samsung Electronics both fell around 9%, reversing part of the previous day’s momentum and signaling that investors were willing to take gains in the sector despite broader market support from easing oil.
China and Hong Kong: Mainland China’s Shanghai Composite edged down 0.59% to 3,809.66, while Hong Kong’s Hang Seng rose 0.48% to 26,009.40. In corporate news, Alibaba Group Holding shares surged about 7% after the company launched what it described as its largest and most capable AI model, Qwen3.8-Max.
Australia and New Zealand: Australian equities advanced, led by banking and healthcare stocks. The S&P/ASX 200 rose 0.47% to 9,019.30, with reports of progress in peace talks involving Iran lifting optimism around a diplomatic resolution. New Zealand’s S&P/NZX-50 climbed 0.55% to 13,774.93 on a broad-based rally.
How the U.S. session set the tone
While Asia opened the day under pressure from a near-term pullback, the last U.S. session had ended firmly higher. U.S. stocks closed higher on Friday, extending Thursday’s rally, helped by a bounce in tech and a recovery in risk appetite after crude oil fell back from earlier highs tied to news about Iran attacking tankers transiting the Strait of Hormuz under U.S. military escort.
In the rate debate, Fed commentary remained a focus. According to remarks cited in the report, Minneapolis Fed President Neel Kashkari dissented from a decision to hold the Fed’s overnight borrowing rate steady, arguing that smaller hikes now can reduce the need for larger moves later. Cleveland Fed President Beth Hammack added that persistent high inflation can make it more difficult and more costly to bring inflation back down to 2%.
That backdrop mattered for Asia because easing crude prices and lower bond yields can quickly reshape expectations for future rate paths—yet the Fed officials’ comments underscored that inflation uncertainty remains a live market variable.
What analysts and investors will watch next
With markets reacting simultaneously to geopolitical headlines, currency intervention risk, and the aftermath of large Friday gains, the next driver is likely to be clarity on whether diplomacy around Iran progresses. Investors will also monitor further signals from central banks for guidance on the direction of interest rates and inflation expectations, along with ongoing moves in the yen and oil prices.
In the near term, traders are likely to focus on follow-through in semiconductor and AI-linked equities, as well as whether the sector’s Friday strength can stabilize after Monday’s pullback. Additional developments in Iran-related negotiations and any subsequent updates on military or diplomatic actions could further influence energy markets and risk sentiment.
