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The Nikkei 225 tumbled 5.81%, marking its worst day since March 2020, and dropping below 36,000 mark for the first time since January.
The broader Topix saw a larger loss of 6.14%, marking its worst day in eight years.
Speaking to CNBC's 'Squawk Box Asia,' Bruce Kirk, chief Japan equity strategist at Goldman Sachs said that the Japanese market rally has reached a 'transitional phase.'