The Nikkei share average fell 0.92 per cent to close at 27,824.83, after rising 0.8 per cent earlier in the session, while the broader Topix edged down 0.24 per cent to 1,878.86.
“Japanese tech shares could have tracked Nasdaq’s higher finish on Friday but they didn’t. That means the market has negative reasons that are unique to Japan,” said Norihiro Fujito, chief investment strategist, Mitsubishi UFJ Morgan Stanley Securities.
“The biggest reason is the slow rollouts of vaccines. That weighs on business sentiment, which prompted investors to sell the Nikkei’s heavyweights.”
On Friday, Japan expanded a state of emergency to three more prefectures in a surprise move that reflects growing concern about the spread of the coronavirus.
Japan’s inoculation drive has been the slowest among advanced nations, with just 3 per cent of the population vaccinated, according to Reuters data.
“Coronavirus infections and slow vaccination are the biggest factors. The measures that have been taken so far may not be enough in curbing variants and economic activities may have to slow down further,” said Naoya Oshikubo, senior manager of research at Sumitomo Mitsui Trust Asset.
Disappointment over earnings and forecasts also weighed on some shares. Honda Motor fell 2.68 per cent, as the automaker warned semiconductor shortages and higher raw material costs would curb growth in the current year.
Fujikura dropped 15.4 per cent and was the biggest decliner among Nikkei constituents after the maker of cables and other non-ferrous metal products posted downbeat earnings results.
Seven & i Holdings fell 3.1 per cent after U.S. officials raised competitive concerns over the Japanese retailer’s acquisition of 3,900 Speedway gas and convenience stores from Marathon Petroleum Corp.
