Global stocks have declined as fresh hostilities in the Middle East pushed up oil prices and as investors rushed out of the hottest AI-linked shares on fears that the bull run has gone too far, too fast.
The twin triggers for the tech rout were the disappointing outlook at chipmaker Broadcom last Wednesday and a surprisingly strong US jobs report on Friday that has traders pricing in a rate hike from the Federal Reserve in 2026.
Escalating conflict in the Middle East is also hurting sentiment after Israel said it struck military targets in western and central Iran, pushing Brent crude futures five per cent higher.
"The market has gone a long way without a correction," said Lars Skovgaard, senior investment strategist at Danske Bank.
"The big surprise is not that we had a sell-off, but that we didn't have it before."
Europe's STOXX 600 was down 0.8 per cent on Monday.
Major bourses in Frankfurt, Paris and London were down between 0.4 per cent and one per cent.
Europe's relative lack of a technology hardware sector and greater exposure to energy prices have meant its major markets have largely taken a back seat in the rally that has gripped Wall Street, Tokyo and Seoul, but it also makes the region more insulated than other markets to a sharp sell-off in the tech space.
In Asia, the decline in equity markets was starker.
South Korea's chip-heavy KOSPI, the world's best-performing market in 2026, led losses with an 8.3 per cent slide that has the benchmark down more than 16 per cent from the previous week's record high.
Japan's Nikkei fell almost four per cent with market darlings across the computer-chip production supply chain falling furthest, while Taiwan's benchmark sank 3.5 per cent.
Nasdaq futures were attempting a recovery following a sharp sell-off on Friday when the index dropped 4.2 per cent.
"The move looks more like a positioning and momentum unwind than a reassessment of the long-term AI story," said Marc Velan, head of investments at Lucerne Asset Management in Singapore.
"(South) Korean technology names have been among the strongest performers globally and were heavily owned, so when rate expectations shifted after the jobs report, they became a natural source of liquidity."
In bonds, the two-year Treasury yield rose more than 11 basis points on Friday after the robust jobs report.
It was up 1.5 bps on Monday to 4.1784 per cent as markets bet that the Fed will hike rates in 2026.
The benchmark 10-year yield rose 3.5 bps on Monday to 4.57 per cent.
"The yield rise was the one that cooked the market. That was the last straw," Danske Bank's Skovgaard said.
"With volatility rising you've had some forced selling of investors having to lower their exposure to equities."
The week ahead is headlined by the giant SpaceX listing, expected to price on Thursday and trade on Friday, but inflation will also be in focus with US consumer price data due on Wednesday and central bank meetings in Canada and Europe.
SpaceX's debut is expected to be followed by other major IPOs in the coming months from Anthropic and OpenAI, raising so much money that brokers are nervous it could draw down other assets.
In currency trading, the dollar was firm and holding above 160 yen, keeping investors on watch for intervention from Japanese authorities.
The euro hovered at $US1.1518.
