The Nikkei share average fell 1.25% to 27,652.74, falling below a major support level of its 200-day moving average of 27,672 for the first time since early last year.
“The 200-day average is an important technical level. A fall below that could possibly lead to a fall to around 25,500,” said Nobuhiko Kuramochi, a senior strategist at Mizuho Securities.
Semiconductor-related stocks led the decline after U.S. tech shares slumped last week, with the Philadelphia semiconductor shares index hitting a one-month low.
The broader Topix lost 1.3%, with all of its 33 industry sub-indexes except the drug sector in the red, in line with shares slipping globally on rising concerns about a surge in coronavirus cases.
Tokyo Olympics organisers on Sunday reported the first COVID-19 cases among competitors residing in the athletes’ village, as its population swells ahead of the start of the pandemic-hit Games next week.
“We could see clusters at Olympics, and then more infections in Tokyo. That could lead to political instabilities in Japan,” said Naoya Oshikubo, a senior economist at Sumitomo Mitsui Trust Asset Management.
Eroding public support for Prime Minister Yoshihide Suga ahead of an election later this year also weighed on investor sentiment, with a Kyodo poll showing on Sunday that his cabinet’s support rate fell to 35.9%, the lowest since he took power last September.
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