July 22, 2020 / 6:53 AM / 14 days ago

Nikkei slips ahead of long weekend, railways hit by virus

TOKYO, July 22 (Reuters) - Japanese shares dipped on Wednesday as investors locked in recent gains ahead of a long weekend, with a rise in domestic coronavirus cases weighing on major railway operators.

The Nikkei share average fell 0.58% to 22,751.61 ahead of a four-day weekend, which was supposed to coincide with the start of the Tokyo Olympics. The broader Topix lost 0.62% to 1,572.96.

“The technology sector, which was starting to boom even before the pandemic, remains the rising star of the market because of all the social changes due to the virus,” said Hiroshi Watanabe, senior economist at Sony Financial Holdings.

“On the other hand, various in-person services were buried.”

Railway shares continued to perform poorly as domestic virus cases continued to rise, reflecting lack of investors’ confidence in the government’s campaign to promote domestic tourism that started on Wednesday.

East Japan Railway fell 2.9% to a seven-year low, while West Japan Railway lost 1.7% to a trough last seen in 2014.

Drugmakers, among the best performers in the early stages of the pandemic, also dropped as investors rotated out of defensives to cyclicals.

Drugmakers dropped 1.5%, with Daiichi Sankyo losing 4.6%.

On the other hand, Nidec jumped 4.8% after the manufacturer of electronic motors posted strong earnings, with its quarterly operating profit rising slightly from a year earlier, beating analyst forecasts of sharp falls.

Fujitsu General climbed 3.8% to a three-year high as the firm raised its earnings guidance, due to solid sales of air-conditioning machines.

Shares of some other electronic parts makers gained, with Shin-etsu Chemical up 2.1% and Murata Manufacturing rising 1.1%.

Decliners outnumbered gainers by a ratio of 78 to 22.

Still, the losses were kept in check as investors bet Washington will deliver a new round of stimulus and after the European Union agreed on an economic recovery fund. (Reporting by Hideyuki Sano; Editing by Krishna Chandra Eluri)

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