Asian markets plunged Monday, with Seoul's Kospi index diving more than eight percent, as a major sell-off in technology stocks erased recent AI-driven gains. Strong US jobs data has fueled expectations that the Federal Reserve may raise interest rates again, rattling investors.
Adding to the gloom, tensions between Iran and Israel escalated, pushing oil prices up more than three percent. The technology sector bore the brunt of the losses as investors cashed out after months of surging AI stock values.
A key report Friday showed US job creation in May more than doubled expectations, with previous months also revised higher. Analysts say the resilient economy increases the likelihood of Fed rate hikes, which sent Treasury yields higher and the dollar stronger against major currencies.
Wall Street fell sharply Friday, with the Nasdaq dropping four percent, and the selling extended into Asia. Seoul's market, which had hit multiple record highs this year, saw Samsung plummet nine percent and SK hynix lose six percent.
Taipei sank more than five percent, Tokyo more than four percent, and there were heavy losses in Hong Kong, Shanghai and Singapore.
Bitcoin briefly dipped below $60,000 before recovering to around $63,000, its lowest since October 2024.
"Stronger-than-expected labor market data reignited concerns that the Federal Reserve may be preparing to embark on a new tightening cycle," said SPI Asset Management's Stephen Innes. He noted fading hopes for Middle East peace and disappointing guidance from major tech companies interrupted the AI trade.
US chipmaker Broadcom's below-forecast revenue outlook for the third quarter added fuel to the fire.
Crude prices surged after Israel struck targets in western and central Iran, with Iranian state TV reporting explosions in Tehran, Tabriz and Isfahan. The attacks came a day after Israel intercepted Iranian missiles, the first such barrage since an April ceasefire.