Key Takeaways
May 3, 2026 · 2 min read · By Rishabh Bhardwaj
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AI-assisted, human-reviewed · Our editorial standards
Japan's Nikkei share average rose on Monday, staying close to the all-time high it reached last week, as enthusiasm around artificial intelligence continued to drive buying in tech-heavy stocks despite ongoing tensions in the Middle East.
The AI sector has been a consistent engine for equity markets in recent months. Investors have been pricing in strong earnings potential from companies tied to AI infrastructure, chips, and software, and that appetite has been enough to offset the risk-off pressure that Middle East instability would normally trigger.
Japan's market is particularly sensitive to global tech sentiment. The Nikkei includes major exporters and technology-linked companies whose valuations tend to track the broader global mood around innovation cycles. When AI enthusiasm runs high in the US, it tends to lift Japanese equities with a short lag.
Geopolitical risk from the Middle East, including concerns around energy supply disruption and broader regional instability, has been a recurring headwind for global markets. On Monday, that concern was present but not dominant. Markets appear to be treating the situation as a known risk rather than a new shock, which limits its day-to-day impact on equities.
Oil price moves, which are the most direct transmission channel from Middle East tensions to corporate costs and inflation expectations, are the key variable to watch. If energy prices spike sharply, the calculus for equities, including the Nikkei, could shift quickly.
For now, the balance of sentiment favors growth. The Nikkei's proximity to its all-time high suggests that buyers remain in control, and AI-linked momentum is providing enough fuel to keep the index elevated. Whether that holds depends on how both the AI earnings cycle and Middle East developments unfold in the weeks ahead.
Indian startups raised $5.2 billion across 501 deals in H1 2026, down 9% in value but up 7% in deal count year-on-year, per the Inc42 Indian Tech Startup Funding Report. The drop is driven by fewer mega-rounds, while AI funding surged 317% and growth-stage deal activity hit a multi-year high.
The BSE Sensex fell 893 points and the Nifty 50 shed 279 points on June 30, 2026, wiping out roughly Rs 6 lakh crore in investor wealth in a single session. Both indices dropped 1.16%, closing at 76,200.68 and 23,824.10 respectively.
Kotak Mahindra Bank shares fell nearly 3% to Rs 397.6 after CEO Ashok Vaswani announced plans to exit the bank. Investor concern now centres on succession timing and whether the bank's ongoing digital and deposit-growth strategy will stay on track.
South Korea's Kospi dropped 3% at Monday's open while Japan's Nikkei fell 1%, as escalating US-Iran conflict triggered a broad risk-off move across Asian markets. South Korea's heavy reliance on Middle East oil imports makes it especially vulnerable to geopolitical shocks of this kind.