Japanese stocks slump to six-month lows

SYDNEY, Apr 12 (Reuters): Japanese shares staggered to six-month lows on Friday as an escalating selloff on Wall Street spread to Asia and slugged markets that had been fairly resilient up to now.
European bourses were destined to share the pain with the DAX predicted to open down as much as 1.1 per cent and the FTSE 0.8 per cent, according to spread betters.
The S&P 500 E-Mini contract was holding steady, at least for now.
What was increasingly looking like a major portfolio shift from momentum plays in US technology and biotechnology stocks was having a knock-on effect across all regions and sectors, pressuring even defensive shares.
Momentum investing involves buying stocks that are already trending higher, often taking their price/earnings ratios into the stratosphere. When the momentum turns it can do so viciously as investors rush to the exits at the same time.
Japan, in particular, was vulnerable both to the dive in tech stocks and to the strength of the yen, which crimps exports and corporate profits. The Nikkei gapped lower right from the off to reach a trough of 13,885.
Dealers suspected the authorities were working behind the scenes to get public pension funds to buy and stop the rot, but with only limited success.
The index ended 2.4 per cent lower at 13,960, with the breach of chart support at 14,200 and the close under 14,000 both body blows from a technical perspective.
Tech bellwether Softbank felt the heat with a drop of 3.8 per cent to its lowest in over two months. Clothing giant Fast Retailing shed almost 8 per cent after it cut its profit forecast when investors were already nervous about the impact of this month's sales tax hike.