Japanese stocks are under pressure, opening 2.3% lower as they follow the lead of global stocks. It's been a one-way trade lower since the Iran war in large part due to the inflationary spike in oil and LNG prices. Japan is more vulnerable than just about any country to oil and gas import prices and you could see it in the market's performance.That said, we're only back into the spike higher that came after the LDP and Prime Minister Takaichi had a resounding super-majority win in the February election. The Nikkei is still one of the world's best performing indexes over the past year and so there is plenty of froth to work off here.The decline is even worse in South Korea, where the Kospi is down 6%. Korean stocks have had a meme-like run in the last year and particularly early this year, rising +40% YTD before the war. That comes after years of extremely-depressed multiples that were shaken loose in part because of the rally in memory chip stocks.As for Japan, eyes will be on the Bank of Japan and how they react to the energy price jump. Central bankers are loath to try to combat energy price spikes, even ones that are much larger than this one. At the same time, the playing field is more sensitive due to recent covid price spikes and the inability to fully re-anchor inflation afterwards. Japan was already in a hiking cycle and this will make them more likely to pull the trigger. That should be a headwind for stocks but we also want to keep an eye on fixed income.Japanese government bonds looked precarious early this year with a spike in yields but that's since been washed away. I take the bigger signal from the bond market right now but there's nothing wrong with lightening up on Japanese equities after a big run. That's the problem with many markets at the moment -- they're frothy -- and in that kind of situation that makes the fragile. At times, a war in the Middle East and an energy price spike can be safely ignored and I think that will ultimately be the case yet again, but the backdrop of recent gains makes everyone a bit more likely to take profits rather than riding it out. This article was written by Adam Button at investinglive.com.