The Nikkei share average slipped 1.61 per cent to 29,671.70, falling below the psychologically important mark hit last week, while the broader Topix fell 1.82 per cent to 1,903.07.
“Unstable moves of the U.S. market overnight has made investors in Japan get worried about the outlook,” said Koichi Kurose, chief strategist at Resona Asset Management.
“Investors are rotating their targets now because of the rollouts of vaccines, which makes the virus-hit shares attractive.”
The Nasdaq fell overnight, becoming the only major U.S. stock index to lose ground while Wall Street reversed its losses, with the S&P 500 and the Dow reclaiming positive territory.
In Japan, index heavyweight SoftBank Group, down 5.2 per cent, was the biggest contributor to Nikkei’s fall.
Chip-related shares also dragged the index down, with Fanuc losing 4.66 per cent, Tokyo Electron falling 2.74 per cent and Shin-Etsu Chemical slipping 4.35 per cent.
Pandemic-driven stocks including department store operators gained on hopes for normalization in the economy. Isetan Mitsukoshi Holdings, up 5.19 per cent, was the top Nikkei gainer, followed by Takashimaya, which rose 4.94 per cent. J.Front Retailing rose 4.64 per cent.
Regional governments in Japan have requested emergency pandemic measures be lifted ahead of the March 7 scheduled end as new Covid-19 cases trend lower, the country’s economy minister said.
Railway and airline shares gained, with Japan Airlines rising 3.6 per cent and ANA Holdings gaining 2.12 per cent.
Central Japan Railway jumped 1.25 per cent even as the operator of bullet trains between Tokyo and Osaka flagged bigger losses for the year ended March. East Japan Railway rose 1.77 per cent.
