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Nikkei Dips Below 28,000 as Tech Stocks Track Nasdaq Slide

TOKYO, July 16 (Reuters) - Japan’s benchmark Nikkei share average dipped below the psychologically key 28,000 mark on Friday as tech shares tracked declines on Wall Street overnight, while a continued surge in coronavirus infections dented investor sentiment.

New COVID-19 infections leapt to 1,308 in Tokyo on Thursday, the highest since January, a week before the city hosts the Olympics, which could potentially spark a renewed surge in infections amid the influx of foreign athletes and officials.

“New cases have already surpassed the peak of the fourth wave in May, and we could see the number rising above the January peak,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“It is hard to expect the surge in infections to subside any time soon, which obviously delays Japan’s economic recovery. That is what markets are pricing in now.”

The tech-heavy Nikkei fell as low as 27,847.35 before closing the session 1% down at 28,003.08, tracking Nasdaq Composite-led declines in U.S. shares.

Among components, chipmakers Advantest and Tokyo Electron lost 2.2% and 1.6%, respectively, after rival TSMC signalled plans to build new factories in the United States and Japan, and expand production capacity in China.

Camera manufacturers Nikon Corp and Olympus fell 2% and 1.4%, respectively, while Sony Group Corp sank 2.2%.

The Nikkei’s biggest decliner was Eisai, which fell 13% after some large hospitals declined to use an Alzheimer’s drug similar to the one it developed with Biogen.

Uniqlo clothing brand-owner Fast Retailing fell 2.6% after trimming its full-year profit forecast.

The broader Topix ended the day 0.4% lower at 1,932.19. The drag from tech shares was clear with the Topix Growth Index sliding 0.7% while the Value Index slipped 0.1%.

Sony was the biggest decliner among the core 30 Topix names. Nintendo, not included in the Nikkei, was also among the worst performers, down 1.2%. SoftBank Group slipped 0.7%.

Among Topix sectors, pharmaceuticals dropped the most, falling 1.9% mainly on account of Eisai. Precision machinery makers were the next biggest decliners, down 1.4%.

Investors largely shrugged off the Bank of Japan’s decision to leave stimulus settings unchanged.

(Reporting by Kevin Buckland in Tokyo; Additional reporting by Hideyuki Sano; Editing by Vinay Dwivedi)

Source: Reuters


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