Japanese stocks slipped as investor sentiment weakened amid growing fears about the Iran war and rising energy costs. The Nikkei fell 2.8%, with chip stocks leading the decline.

Market participants have become increasingly risk-averse as geopolitical tensions and energy price pressures weigh on corporate earnings outlooks. The semiconductor sector, sensitive to global demand concerns, bore the brunt of the sell-off.

Wall Street Journal Markets reported that the combination of external uncertainties and domestic economic factors contributed to the broad-based decline across Japanese equities.

Analysts note that unless energy prices stabilize and geopolitical risks ease, upward momentum in Japanese stocks may remain constrained in the near term.