Meanwhile, the Bank of Japan is still set to maintain ultra-low interest rates and its dovish policy guidance on Thursday as other central banks opt to hike interest rates to fight soaring inflation.
The benchmark Nikkei 225 Index is down 358.32 points or 1.29 percent at 27,330.10, after hitting a low of 27,297.50 earlier. Japanese stocks closed modestly higher on Tuesday.
Market heavyweight SoftBank Group is losing more than 1 percent and Uniqlo operator Fast Retailing is edging down 0.5 percent. Among automakers, Honda is losing almost 2 percent and Toyota is declining more than 2 percent.
In the tech space, Screen Holdings is edging down 0.3 percent, Advantest is declining almost 1 percent and Tokyo Electron is down almost 2 percent.
In the banking sector, Mizuho Financial and Mitsubishi UFJ Financial are edging up 0.1 to 0.3 percent each, while Sumitomo Mitsui Financial is flat.
Among the major exporters, Sony and Canon are losing 1.5 percent each, while Panasonic is down almost 1 percent and Mitsubishi Electric is declining more than 2 percent.
Among the other major losers, Unitika is plunging almost 5 percent and Daiichi Sankyo is losing almost 4 percent, while Keio, Daikin Industries, Nissan Motor, Mitsui & Co., Tokai Carbon, Pacific Metals and Taiheiyo Cement are declining more than 3 percent each. Suzuki Motor, Konica Minolta, TDK, Sumitomo Osaka Cement, Hitachi and Tokyo Electric Power Co. are down almost 3 percent each.
Conversely, Japan Steel Works is gaining almost 4 percent.
In the currency market, the U.S. dollar is trading in the higher 143 yen-range on Wednesday.
On Wall Street, stocks showed a notable move back to the downside during trading on Tuesday following the advance seen going into the close of Monday's session. With the pullback on the day, the major averages fell to their lowest closing levels in two months.
The major averages climbed off their lows of the session in late-day trading but remained firmly negative. The Dow tumbled 313.45 points or 1.0 percent to 30,706.23, the Nasdaq slumped 109.97 points or 1.0 percent to 11,425.05 and the S&P 500 dove 43.96 points or 1.1 percent to 3,855.93.
The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slid 0.6 percent, the German DAX Index slumped by 1.0 percent and the French CAC 40 Index tumbled by 1.4 percent.
Crude oil prices fell sharply on Tuesday amid concerns about interest rate hikes and worries about the outlook for energy demand. West Texas Intermediate Crude futures for October ended lower by $1.28 or 1.5 percent at $84.45 a barrel on expiration day.