FX.co ★ Japanese Shares Fall on Middle East Conflict

The Nikkei 225 Index fell 2% to around 57,500 on Monday, erasing last week’s gains as the escalating conflict in the Middle East reinforced risk-off sentiment across global markets. Over the weekend, the US and Israel launched military strikes on Iran that killed the country’s Supreme Leader, Ayatollah Ali Khamenei, and led to the effective closure of the Strait of Hormuz. Tehran responded by attacking US assets across the region, heightening fears of a wider confrontation. Japanese equities also tracked Friday’s losses on Wall Street, as investors assessed whether rapid AI adoption could displace traditional software providers. Even so, local stocks had been among February’s standout performers, with the Nikkei climbing 10.4% last month amid a global rotation into Asian companies expected to benefit from the buildout of AI infrastructure.