Nikkei slips ahead of long weekend, cyclicals supported

TOKYO, July 22 (Reuters) - Japanese shares dipped on
Wednesday as investors locked in recent gains ahead of a long
weekend, though expectations of fresh stimulus in Europe and the
United States underpinned many cyclical shares.
The Nikkei share average .N225 fell 0.24% by midday to
22,828.75 but is still up 0.58% so far this week ahead of a long
weekend from Thursday. The broader Topix .TOPX lost 0.10% to
1,581.19.
"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
infections continued to rise, reflecting lack of investors'
confidence in the government's campaign to promote domestic
tourism that started on Wednesday.
East Japan Railway 9020.T fell 2.3% to a seven-year low
while West Japan Railway 9022.T lost 1.2% to a trough last
seen in 2014.
Drugmaker shares, among the best performers in the early
stages of the pandemic, also dropped as investors rotated out of
defensives to cyclicals.
Daiichi Sankyo 4568.T dropped 4.0% to become the worst
performer among Nikkei constituents while Chugai Pharmaceutical
4519.T lost 2.3%.
On the other hand, Nidec 6594.T jumped 5.7% after the
manufacturer of electronic motors posted strong earnings, with
its quarterly operating profits rising slightly from a year
earlier, beating analyst forecasts of sharp falls. Fujitsu General 6755.T hit a 3 1/2-year high as the firm
revised up its earnings guidance, due to solid sales of
air-conditioning machines.
Many cyclical shares, including securities brokerages
.ISECU.T and energy-related firms .IPETE.T , also gained as
investors bet Washington will deliver a new round of stimulus
and after the European Union agreed on an economic recovery
fund.