Due to concerns about domestic and foreign economic growth and the prevalence of risk aversion, the Nikkei 225 index in Japan broke the psychological barrier of 38,000 points for the first time this month.
At the close of trading, the Nikkei index fell 1.8% to 38,102.44 points, having previously fallen as much as 2.2% to 37,956.49 points, its first decline since May 30. The wider Topix index fell 1.7%.
Of the 225 component stocks in the index, 199 fell, 25 rose, and 1 remained unchanged. #Japanese market#
Almost all 33 industries on the Tokyo Stock Exchange fell, with the real estate sector down 3.5% and only the pharmaceutical sector slightly up.
On Monday, auto manufacturers and suppliers fell 2.6%. Toyota Motor, which has been embroiled in a certification scandal, fell 2.6%, making auto-related stocks one of the worst-performing sectors.
According to NHK, production of affected models at Toyota will be suspended for at least another month until the end of July. Toyota Chairman and family descendant Akio Toyoda will face a vote on his re-election at the annual shareholders meeting on Tuesday.
Suzuki Motor fell 3.6% and Mazda fell 3.7%. Chip-related stocks also fell, with Tokyo Electron down 2.5% and Advantest down 3.7%.
Investors sold stocks in a wide range of sectors. This sell-off followed declines in European and US markets. The main index in Paris plummeted last week due to ongoing political uncertainty in France. Stocks in New York also fell due to concerns about economic prospects.
Kazuo Kamitani, a stock strategist at Nomura Securities, said: "Basically, the Nikkei index has been sideways for a long time, but it is now shaken by concerns about the economies of Japan, the United States, and Europe. It is expected that the adjustment may reach 37,500 points."
Since the end of April, the Nikkei index has fluctuated around 38,500 points, with ups and downs of 500 points. One month after hitting a historic high of 41,087.75 points on March 22, it fell to 36,733.06 points.
Analysts said that some investors are avoiding Japanese stocks due to the unclear monetary policy of the Bank of Japan.
The Bank of Japan has stated that it will reduce its purchases of long-term government bonds, but will not decide on the details of the reduction plan until its next meeting in July. It is expected that the Bank of Japan will outline its plan to reduce its nearly $5tn balance sheet next month.
In other fundamental news, Japan's Cabinet Office reported on Monday that machinery orders from 280 manufacturers in Japan fell 3.6% in April from the previous month, reversing a more than 12% increase in March. Core machinery orders, which exclude shipbuilding and electrical power companies, also fell a seasonally adjusted 2.9%.