Asian shares retreated from record highs on Monday as investors took profits and the U.S. dollar gained strength, curbing risk appetite. Japan’s Nikkei and South Korea’s KOSPI both fell by more than 1.5 percent, while Chinese indexes slipped following weak manufacturing data. The broad pullback reflected a mix of profit-taking and caution after weeks of strong rallies.

The yen hit a nine-month low against the dollar, while the euro traded close to a three-month trough, underscoring pressure from widening yield differentials. Traders said many investors were locking in profits ahead of upcoming U.S. labor and inflation data that could shape Federal Reserve policy. The dollar’s rise weighed on commodity-linked currencies across the region.

Technology and semiconductor shares led the declines, reversing recent gains fueled by AI optimism. Meanwhile, resource and energy stocks came under pressure as weaker factory data from China raised concerns about global demand. Investors were also unsettled by a slide in oil prices and soft copper shipments.

Market strategists said that after a remarkable rally, a correction was both natural and healthy. “We’ve seen valuations stretch beyond fundamentals,” said one Tokyo-based analyst, noting that institutional investors are becoming more selective. Some hedge funds are also trimming leverage positions.

With global yields stabilizing and earnings season nearing its end, analysts expect markets to remain range-bound until fresh catalysts emerge. For now, the tone in Asia is one of consolidation rather than crisis.

Source: Reuters.