August 3, 2017 / 2:37 AM / a year ago

Nikkei falls as tech shares slip as 'Apple effect' fades

* ANA soars after Q1 operating profit jumps 80 pct

* Correlation between opinion polls and Japan stocks is weak - analyst

By Ayai Tomisawa

TOKYO, Aug 3 (Reuters) - Japan’s Nikkei share average fell on Thursday as investors wasted little time taking profits in tech shares which rose the previous day after Apple posted strong quarterly earnings.

The Nikkei dropped 0.4 percent to 20,003.17 points by mid-morning, after rising 0.5 percent on Wednesday.

“The Japanese market rose ahead of U.S. markets after Apple’s earnings so investors were quick to lock in gains,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

The Dow climbed above the 22,000 mark overnight for the first time, buoyed by Apple Inc’s healthy quarterly iPhone sales. But other tech stocks such as Applied Materials fell 3.1 percent, while Philadelphia SE Semiconductor Index dropped 0.7 percent.

“Although Apple surged overnight, other U.S. tech stocks were weak, and that’s why investors quickly decided that the overall market would not continue to benefit from ‘the Apple effect’ and Japanese companies like Tokyo Electron fell today,” Fujito added.

Chip equipment maker Tokyo Electron Ltd shed 2.0 percent, while Advantest Corp stumbled 3.6 percent.

Apple suppliers which rose on the previous day languished as well. Murata Manufacturing dropped 0.5 percent and TDK shed 0.4 percent.

Bucking the trend, ANA Holdings Inc soared 4.5 percent after Japan’s biggest airline by revenue said first-quarter operating profit rose 80 percent due to brisk business on international routes and after taking control of low-cost arm Peach Aviation Ltd.

Traders were also awaiting an expected cabinet reshuffle by Prime Minister Shinzo Abe later in the day as he attempts to regain public support hurt by a series of scandals.

“The correlation between opinion polls and Japanese stocks is seen weak for now,” said Takuya Takahashi, a strategist at Daiwa Securities, adding that unless Abe’s support rate declined sharply from the current level, the impact from political developments should be limited on the Japanese market.

Abe had until recently been seen as likely to win a third term as head of his ruling Liberal Democratic Party (LDP) and thus the premiership, putting him on track to be Japan’s longest-serving prime minister.

But support has fallen below 30 percent in the recent polls, hit by opposition-fanned suspicions of Abe’s favouritism to a friend, as well as voter perceptions that he and his aides have grown arrogant in office.

The broader Topix dropped 0.3 percent to 1,630.01. (Editing by Kim Coghill)

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