At closing bell, the 225-issue Nikkei Stock Average stumbled 475.64 points, or 1.77%, to 26,336.66. The broader Topix index of all First Section issues on the Tokyo Stock Exchange declined 31.36 points, or 1.64%, to 1,883.30.
Total 32 of 33 TOPIX sectoral sub-indexes declined, with Machinery, Glass & Ceramics Products, Electric Appliances, Nonferrous Metals, Metal Products, Chemicals, Pulp & Paper, and Air Transportation issues being notable losers.
Tokyo market was rattled on renewed Covid concerns after Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant. China had discovered its first case of a highly transmissible Omicron sub-variant in Shanghai and that new cases had jumped to 63 in the China's largest city from 52 a day earlier.
Traders were nervous that the discovery of the new subvariant and the highest number of daily new cases in Shanghai since May could lead to another round of mass testing, and more Covid lockdowns may lie ahead.
Investors are also bracing for the macro data including U.S. consumer inflation on Wednesday, and comments from Federal Reserve Officials later in the week that could throw light on the path of monetary policy in the US. A high inflation reading would add pressure for the Fed to step up its already aggressive pace of interest rate increases.
CURRENCY NEWS: The Japanese yen traded at 137.38 per dollar, after weakening past 137 against the greenback on Monday. Markets appeared to view the expansion of Japan's ruling Liberal Democratic Party majority in the upper house. The Bank of Japan's commitment to low interest rates is increasingly an anomaly, and has caused the yen to weaken.
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