Japanese stocks slip in cautious mood despite Wall Street rally

SYDNEY, April 9 (Reuters) - Tokyo shares dipped on Thursday
even as Wall Street rallied, with investors cautious about the
impact of the COVID-19 pandemic on corporate earnings.
The benchmark Nikkei average .N225 dropped 0.4% to
19,268.26 by the midday break, despite Wednesday's big rally on
Wall Street.
The Dow Jones Industrial Average .DJI and the S&P 500
.SPX advanced 3.4% each, while the Nasdaq Composite .IXIC
gained 2.6% on hopeful signs the pandemic may be peaking and
Bernie Sanders' decision to suspend his presidential campaign.
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"It is a little premature to call an official peak in the
outbreak, even if some optimism is warranted," said Esty Dwek,
head of global market strategy at Natixis Investment Managers.
Japan recorded 503 new coronavirus infections on Wednesday,
its biggest daily increase since the outbreak, underscoring the
struggle of the authorities to contain the flu-like respiratory
disease without imposing a mandatory lockdown. The Nikkei's volatility index .JNIV , a measure of
investors' volatility expectations based on options pricing and
considered to be a fear gauge, slid to as low as 38.85, its
lowest level in more than two weeks.
"In my view, the recent fall in the volatility level does
not reflect bullish sentiment. Rather, it reflects investors'
reluctance to trade," said Yasuo Sakuma, chief investment
officer at Libra Investments.
Indeed, overall activity was subdued, with the volume of
shares traded on the main board valued at 1.04 trillion yen by
the midday recess.
Bic Camera Inc 3048.T tumbled 7.5% after the electronics
retailer slashed its group profit forecasts for the current
business year through August, citing the impact from the virus
outbreak. "We will look closely at earnings estimates as they are
revised down. Markets may not be factoring in enough
adjustment," said Natixis's Dwek.
The broader Topix .TOPX fell 0.9% to 1,412.46, with all
but four of the 33 sector sub-indexes on the exchange trading in
negative territory.
Land transport .IRAIL.T , securities .ISECU.T and foods
.IFOOD.T were the worst three performing sectors on the main
bourse.
Startup and small-cap stocks bucked the market's overall
weakness due to bargain hunting by retail investors, with the
index of startup-heavy Mothers market .MTHR climbing 2.4% and
the small-cap Jasdaq index .NOTC adding 1.0%.