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Tokyo stocks erased early gains to extend their losses Wednesday, as sentiment was chilled by recent drops on Wall Street stemming from inflation concerns.

The 225-issue Nikkei average of the Tokyo Stock Exchange dropped 461.08 points, or 1.61%, to end at 28,147.51, after tumbling 909.75 points Monday.

The Topix index of all TSE first section issues ended down 27.97 points, or 1.47%, at 1,877.95 following a 46.35-point slump the previous day.

The Tokyo market opened higher, pushed up by buybacks mainly of technology names that tumbled on Tuesday.

But the rebound proved short-lived as all three major U.S. stock market gauges dropped on Tuesday amid mounting concerns that inflation could prompt the U.S. Federal Reserve to rethink its monetary easing policy.

The absence of fresh buying incentives put further downward pressure on Tokyo stocks, sending the Nikkei briefly falling below 28,000 for the first time in over three months.

Investors took to the sidelines ahead of tech investor Softbank Group’s earnings announcement and the release of U.S. consumer price data later Wednesday.

Appetite for semiconductor-related and other tech names was dampened by plunges in Taiwan stocks blamed on fears of further tightening of restrictions after new COVID-19 cases were confirmed there. Taiwan had been widely praised for its success in containing the virus.

Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc., said that “the market was pushed down by worse-than-expected earnings reports released yesterday.”

The absence of the Bank of Japan’s buying in Tuesday’s session had no impact on investors’ sentiment, Ota said. Some brokers had said investors grew increasingly cautious after the central bank stopped short of buying exchange-traded funds to support the market Tuesday.

“Market players might have become overly cautious,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

“Investors were not completely bearish,” Maki Sawada, strategist at Nomura Securities Co., said, noting that they hunted stocks of companies that have reported robust earnings.

On the TSE first section, decliners outnumbered gainers 1,795 to 349 while 48 issues were unchanged. Volume increased to 1.529 billion shares from Tuesday’s 1.289 billion shares.

Softbank Group dropped 3.45% ahead of its earnings announcement.

Chipmaking gear-maker Tokyo Electron fell 3.17% and chip testing device manufacturer Advantest declined 3%.

Nissan tumbled 10.04% because the automaker’s earnings estimate for the current year through March 2022, released Tuesday, was far below market expectations.

Among other major losers were drugmaker Eisai and air conditioner-maker Daikin.

Toyota rose 2.18% after the automaker announced a plan on Wednesday to purchase its own shares worth ¥250 billion.

Sharp soared 6.43% a day after the electronics maker announced its rosy operating profit estimate for the year through March 2022.

Other winners included medical information provider M3 and clothing store chain Fast Retailing.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average fell 550 points to end at 28,140.

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