Japanese shares opened lower as escalating U.S.-Iran military exchanges drove crude prices higher, stoking inflation jitters and tightening expectations.
The Nikkei 225 fell 426.5 points or 0.6% to open at 65,885.47.
Despite the Middle East turmoil, Japanese capital spending rose 2.9% in the second quarter, the Finance Ministry reported Tuesday.
The capex reading, in line with the Bank of Japan's Tankan survey, keeps the central bank on course for a possible Sept. 18 rate hike.
Elsewhere, U.S. Treasury Secretary Bessent told Japanese officials that additional rate increases are necessary, NHK reported on Monday.