Japanese stocks fell on Wednesday, moving further away from the two-month high hit on Monday, as markets tracked Wall Street's decline on fears of a second wave of COVID-19 infections, while some profit booking also weighed on shares.

At the midday break, the benchmark Nikkei average was down 0.8% at 20,210.54, with cyclical sectors leading the declines.

Overnight, Wall Street's all three major indexes dropped about 2% following a warning from the Dr. Anthony Fauci, the top infectious disease expert in the United States, that premature moves to reopen the economy could lead to a second wave of cases and set back economic recovery.

E-mini futures for the S&P 500 index last traded down 0.3% in Asian trade.

Dragging Tokyo shares further, traders said some profit taking was inevitable sooner or later because of the recent rally.

On Monday, both the Nikkei and the Topix closed at their highest levels since March 6.
Investors also kept a watch on simmering U.S.-China tensions after U.S. President Donald Trump ordered the main federal government pension fund not to invest in Chinese companies.

In broader markets, the Topix dropped 0.5% to 1,469.00 by the recess, with four-fifths of the 33 sector sub-indexes on the Tokyo exchange trading lower.

Highly cyclical iron and steel, insurance and air transport sectors were among the worst performers on the main bourse.
Shiseido Co Ltd tumbled 4.9% after its net profit plunged by a shocking 95.8% in January-March quarter and the cosmetics maker withdrew full-year profit and dividend guidance, citing COVID-19 uncertainty.

Toyota Motor Corp, the biggest Japanese company by market cap, lost 1.9% following the automaker's warning that its operating profit will fall almost 80% in the current financial year.

Bucking the overall weakness, NEC Corp jumped 5.2% to a 2-1/2-month high after the electronics maker delivered a positive surprise for investors by raising its annual dividend forecast.

Reuters