TOKYO: Japan’s Nikkei fell on Wednesday after a two-day rally, dragged down by energy stocks, as sentiment was weighed by fears of a global economic slowdown.

The Nikkei share average fell 1.20% to 26,107.65, while the broader Topix slipped 1.23% to 1,855.97.

“Investors’ focus have shifted to slowdown risks stemming from the ongoing tightening monetary policy,” said Ikuo Mitsui, fund manager at Aizawa Securities. “Wall Street rose overnight but that was because investors bought back growth shares that were beaten-down on concerns about rate increases.”

In Japan, oil explorers tumbled almost 10% to become the worst performer among the 33 industry sub-indexes on the Tokyo Stock Exchange.

Crude futures rebounded on Wednesday as investors piled back in after the heavy rout in the previous session, shifting their focus again to supply concerns even as worries about a recession mounted.

Refiners lost 5.12% and utilities fell 3.73%.

Oil explorer Inpex was the worst performer on the Nikkei, down 10.05%. Refiner Idemitsu Kosan lost 6.1% and Tokyo Electric Power Company Holdings tumbled 6.28%.

Travel and leisure-related shares also fell, as mass COVID-19 testing in China stocked fears of potential lockdowns.

Insurance sector fell 4.47%, with T&D Holdings losing 6.14% and Dai-ichi Life Holdings falling 5.58%.

Trading firms Mitsui & Co and Mitsubishi Corp fell 5.45% and 4.92%, respectively, after former Russian president Dmitry Medvedev made comments threatening the loss of oil and gas supply to Japan.

Bucking the trend, Eisai jumped 5.87% after the drug maker and its partner Biogen said the US Food and Drug Administration will expedite its review of experimental Alzheimer’s drug lecanemab.