The Nikkei fell 3.5% to 54,340.02 of 0215 GMT, marking its lowest point since February 6, and is on track for a third consecutive session of losses, if current momentum persists.
The broader Topix lost 3.68% to 3,633.03.
“Investors sold down risk assets, and in particular, the Nikkei as well as the KOSPI, which outperform other major indexes, have become a target of the heavier selloff as they try to book profits,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
Shares in Seoul’s benchmark index dived 7% on Wednesday.
Israeli and U.S. forces pounded targets across Iran on Tuesday, prompting Iranian retaliatory strikes around the Gulf as the conflict spread to Lebanon, rattled global markets, and sent oil prices sharply higher.
In Japan, chip-related heavyweights led the Nikkei’s decline, with Advantest and Tokyo Electron falling nearly 5% each. Technology investor SoftBank Group lost 6.89%. All 33 industry indexes slipped, with the oil refinery index falling 7.65% to rank as the worst performer.
Investors scooped up beaten-down software-related shares. Baycurrent jumped 5.7% and Shift gained 1.84%.
The move is an exact mirror of the U.S. market where their peers such as Salesforce rose overnight, IwaiCosmo’s Shimada said.
Shares of Nidec jumped 5.5% after the electric motor manufacturer warned that it could face 250 billion yen ($1.6 billion) in writedowns from a deepening accounting scandal that sparked the exit of its founder and other top executives.
Sony Group rose nearly 1% and Nintendo was up 1.37%.
Among the more than 1,600 stocks traded on the Tokyo Stock Exchange‘s prime market, 92% fell, 6% advanced and 1% traded flat.