Nikkei drops on weak chip stocks, tests key support from 200-day average

TOKYO, July 19 (Reuters) – Japan’s Nikkei stock average fell on Monday to test a major support level against its 200-day moving average as semiconductor stocks came under pressure from losses in their US peers because of profit taking.

Sentiment has also been touched by concerns over the spread of the highly contagious Delta variant of the coronavirus and the Tokyo 2020 Olympics likely exacerbating the health crisis and eroding public support for Prime Minister Yoshide Suga ahead of elections later this year. .

By late afternoon, the Nikkei stock average fell 1.58% to 27,561.59, approaching last week’s two-month low of 27,419.40.

He risked a decisive break below his 200-day average, now at 27,672, for the first time since the start of last year.

“The 200-day average is an important technical level. A fall below it could potentially lead to a drop to around 25,500,” said Nobuhiko Kuramochi, senior strategist at Mizuho Securities.

Semiconductor stocks led the decline after US tech stocks slumped last week, posting four straight days of losses, with the Philadelphia semiconductor stock index hitting a low of one. month.

Taiyo Yuden lost 4.9%, while Sumco lost 4.0%. Tokyo Electron lost 2.2% while Advantest lost 1.4%.

The larger Topix lost 1.6%, with all of its 33 industry sub-indices in the red, in line with lower global stocks amid growing concerns over an increase in coronavirus cases .

Tokyo Olympics organizers reported the first cases of COVID-19 among competitors residing in the Athletes’ Village on Sunday, as its population grows ahead of the pandemic-stricken Games start next week.

“We could see clusters at the Olympics, then more infections in Tokyo. This could lead to political instability in Japan,” said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.

Public support for Suga’s cabinet fell to 35.9%, according to a Kyodo poll on Sunday, the lowest since taking office last September. (Reporting by Hideyuki Sano; Editing by Rashmi Aich)

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