China is said to be Japan's second-largest export destination. It has also been said that Chinese are 30% of what makes up the tourists in Japan. Cancellation of trips incoming and outgoing to China certainly affects its economy, that's why I am under the impression that Tokyo Stocks Exchange (Tosho) will drop even further. The 5-day index shows a 1.48% drop as we speak.
If the coronavirus reaches pandemic levels as some experts predict, the economic implications will go much further than just Japan. It could significantly slow global GDP growth and hasten the timeline of all these "incoming global recession" predictions.
On the other hand, this stuff is probably being blown out of proportion. 2019-nCoV is about as contagious as SARS was, but it's significantly less deadly:
This will probably all resolve itself in the next several weeks.