Tokyo's benchmark Nikkei index closed lower this morning, ending the year with its first annual loss since 2012, as negative factors including US-China trade tensions weighed on the market.
The bellwether index lost 12.1% from a year earlier to end at 20,014.77 in roller-coaster trade.
The Nikkei 225 index had surged to a 27-year high in October on a cheap yen and rallies on Wall Street but has since rolled downslope.
The index lost more than 5% on Tuesday to have the worst finish since April 2017.
On Friday alone, the Nikkei lost 0.31% as investors cashed in ahead of the New Year holidays.
The Tokyo markets will not resume trading until Friday next week.
"The Nikkei scored annual gains for the past six years under Abenomics but it's not the case any more," analysts, said referring to Prime Minister Shinzo Abe's pro-spending policies.
They said this was because of large swings caused by the Trump administration rather than domestic problems, noting President Donald Trump's trade spat with China weighed particularly on the market.
Japan "cannot be unaffected when the world's two biggest economies are fighting," they added.
Another analyst said the market is still forecast to recover the recent losses once the US-China trade war and Brexit can be settled.
Japanese corporate activity remains solid at least for now, which could invite buy-backs sometime next year, the analyst added.
Fresh government data released today confirmed Japan's job market remains tight, with unemployment staying low at 2.5% for November.
Factory output in November turned down 1.1% from the previous month, but the drop had been widely expected after an October rise in production.