Shares were mixed in Asia on Wednesday, with Chinese markets closed for a weeklong holiday, as a U.S. government shutdown loomed.

Japan’s Nikkei 225 index shed 1.2% to 44,411.26 after the Bank of Japan reported a slight improvement in business sentiment among major manufacturers.

The BOJ’s quarterly tankan adds to the likelihood the central bank will raise its key interest rate soon, to counter inflation that has topped its target range of about 2% for some time.

Political uncertainty is also looming over Japan’s markets, with the ruling Liberal Democratic Party due to chose a new leader and prime minister later this week to replace embattled Prime Minister Shigeru Ishiba.

Although markets and offices in mainland China are closed Oct. 1-8 for the National Day holiday, China’s central b

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