Nikkei falls below 10,000, sparks fears rally is over

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Japan's Nikkei share average abruptly broke below 10,000 to hit a four-week low on Wednesday, after stop-losses were triggered on index futures, raising concerns that Tokyo's strong equities rally so far this year was screeching to a halt.

Sliding more than 100 points in five minutes during mid-morning trade on the triggering of stop-losses, the Nikkei was also hurt as investors dumped widely held Fast Retailing Co Ltd which reported disappointing sales figures for March.

Market participants worried that the day's move below 10,000, a psychologically important level, marked a negative shift in sentiment for the benchmark which has gained 17.2 per cent for the year to date and marked its best first-quarter performance in 24 years.

"Cutting below that level shows the rally may have lost its lustre," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo.

The Nikkei shed 1.4 per cent to 9,910.84 by the midday trading break, falling below 10,000 for the first time since March 23 and at one stage hit a four-week intraday low of 9,886.34.

"There is quite aggressive selling as 10,000 represented a trigger level. Also part of the reason is Fast Retailing's drop, which is breaking down key support levels," said Worrall.

The operator of Uniqlo casual clothing chain and Asia's largest apparel retailer, shed 4.4 per cent to top the main board as the heaviest-weighted loser after reporting a 5.1 per cent year-on-year increase last month, undershooting market participants' expectations of a double-digit rise.

The stock is still up more than 28 per cent since January, as one of many shares in Tokyo that have logged meteoric gains on the back of a global market upturn.

Strategists also cited some regional distortion that may be exaggerating the market move as Shanghai and Hong Kong stock markets are closed for holidays on Wednesday.

The broader Topix fell 1 per cent to 842.57. Trading volume was moderate, with the Nikkei trading at 53 per cent of its average daily 90-day volume.

FED MINUTES
Contributing to the bearish market sentiment were minutes from the U.S. Federal Reserve March meeting released on Tuesday.

The minutes drove U.S. shares down overnight, with market players voicing disappointment over the Fed's toned down assessment of a possible need for another round of monetary stimulus.

Supportive central bank policies have been a primary catalyst for massive U.S. gains.

Bucking the trend was Asahi Group Holdings Ltd, which climbed 3.2 per cent to be the second-biggest weighted gainer on the main board after U.S. Molson Coors Brewing Co outbid the Japanese brewer for East European brewer StarBev in a deal worth $3.5 billion.

Also gaining was Suzuki Motor Corp, which climbed 0.2 per cent. It earlier hit a 14-month high at 2,062 yen after Morgan Stanley upgraded the automaker to 'overweight' from 'underweight'.