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 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 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 fell 2.3% to a seven-year low while West Japan Railway 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 dropped 4.0% to become the worst performer among Nikkei constituents while Chugai Pharmaceutical lost 2.3%.
On the other hand, Nidec 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 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 and energy-related firms, also gained 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