Japanese stocks tumbled sharply as geopolitical tensions over the Strait of Hormuz sent investors fleeing to safety. The Nikkei 225 dropped as much as 3.1% in early Monday trading, while the broader Topix slumped 2.7%, extending losses from a public holiday on Friday when global markets had already reacted to mounting concerns.

The selloff accelerated after former President Trump threatened attacks on power plants near the strategic waterway, amplifying fears of supply disruptions in the Middle East. Rising oil prices added to the pressure, with energy stocks leading the declines as traders priced in higher fuel costs and potential economic fallout from regional instability.

Tokyo's market catch-up trade following the holiday closure magnified the volatility, with investors reassessing risk exposure across Asian markets. The combination of geopolitical rhetoric and energy market jitters created a perfect storm for Japanese equities, which remain sensitive to global trade flows and regional security dynamics.