The Nikkei Stock Average saw its largest tumble in eight weeks on fears of higher taxes under Japan’s incoming Prime Minister Shigeru Ishiba as well as on a stronger Japanese yen.

Japan's benchmark Nikkei share average tumbled more than 4 per cent on Monday in reaction to a sharply stronger yen after perceived monetary policy hawk Shigeru Ishiba won the contest to become the country's prime minister.

Stocks dropped after Japan’s governing party chose Shigeru Ishiba, a critic of the country’s longstanding ultralow interest rates, as its leader.

Japan’s benchmark Nikkei 225 index tumbled nearly 5% early Monday after the country’s ruling Liberal Democrats chose Shigeru Ishiba, a former defense minister, as the next prime minister.

Shigeru Ishiba’s election as leader of Japan’s ruling Liberal Democratic party is expected to put pressure on the country’s stocks on Monday morning after Nikkei 225 futures fell 6 per cent following his victory this week.