August 10, 2018 / 3:01 AM / 2 months ago

Nikkei falls as chip sector tumbles, firm GDP fails to impress

* Nikkei has posted 0.1 pct weekly drop so far

* Strong Q2 GDP gives little impact

* Fujifilm soars on share buyback announcement

By Ayai Tomisawa

TOKYO, Aug 10 (Reuters) - Japan’s Nikkei fell on Friday morning as semiconductor-related shares tumbled after Morgan Stanley downgraded its view on the U.S. chip sector, which offset any boost from Japan’s better-than-expected second quarter economic growth.

The Nikkei share average dropped 0.4 percent to 22,513.93. For the week, it has shed 0.1 percent so far.

Chip equipment makers Tokyo Electron dropped 3.3 percent, Advantest Corp fell 3.5 percent and Screen Holdings shed 3.1 percent, while silicon-wafer maker Sumco Corp tumbled 5.1 percent.

Morgan Stanley cut its outlook for the U.S. semiconductor industry to “cautious” from “in-line,” saying it could not see much upside to its estimates partly due to increasing trade tensions.

Investors are keeping an eye on Japan’s trade talks in Washington. Both Japan and the United States failed to reach an agreement in talks on Thursday between U.S. Trade Representative Robert Lighthizer and Japanese Economy Minister Toshimitsu Motegi, who stuck to Tokyo’s position that it preferred multilateral free-trade agreements over bilateral ones.

“What is crucial for Japan is whether there will be an impact to its auto sector. Right now it’s hard to make an investment decision so we need to wait till next week to digest the outcome of the talks,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Apart from chip-related stocks, Friday’s losers included insurance shares. Dai-ichi Life Holdings shed 2.4 percent and Sompo Holdings declined 1.4 percent.

Meanwhile, Fujifilm Holdings soared 4.6 percent after the company said to buy back up to 100 billion yen of its own stock.

On Friday, government data showed Japan’s economy expanded at an annualised rate of 1.9 percent in April-June, bouncing from a contraction in the previous quarter, in a sign its recovery momentum remained intact.

The preliminary reading for second-quarter gross domestic product compared with a median estimate for a 1.4 percent in a Reuters poll of economists.

The broader Topix dropped 0.6 percent to 1,730.39. (Editing by Sam Holmes)

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