Japan's Nikkei share average shed 2.3% on Wednesday in its worst performance in five months, after stop-losses were triggered on index futures, raising concern that Tokyo's sharp equities rally so far this year could be grinding to a halt.
The Nikkei closed down 230.40 points at 9,819.99, below 10,000 for the first time in three weeks that saw the benchmark hit the highest level since the massive earthquake and tsunami in March last year.
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 key level, marked a negative shift in sentiment for the index, which has gained 17.2% for the year to date, its best first-quarter performance in 24 years.
"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 Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo.
Fast Retailing, the operator of Uniqlo casual clothing chain and Asia's largest apparel retailer, sagged 5.7% as the heaviest-weighted loser after reporting an underwhelming 5.1% year-on-year increase in same-store sales last month, well below market expectations for a double-digit rise.
Investrust Chief Executive Hiroyuki Fukunaga said the market was still going through some necessary corrections.
"This looks likely to continue until at least the middle of the month, when there'll be an options special quotation," he said.
Wednesday's fall saw the Nikkei close below its 25-day moving average and the 61.8% retracement of its fall from February to November last year near 9,833.
Bucking the trend was Enplas Corp, the biggest percentage gainer with an increase of 9.8% after Mizuho Securities updated its rating to "buy" from "neutral".
Also fighting the current was Asahi Group Holdings Ltd, which finished 2% up as the top weighted gainer on the main board after it was outbid by US Molson Coors Brewing Co for East European brewer StarBev.
Trading was moderate, with 1.48 billion shares changing hands on the Nikkei. An unusually thin morning exaggerated the impact of a large futures sell order, a senior dealer at a foreign brokerage said.
He added that the market move was distorted by the closures of the Hong Kong and the Shanghai markets for public holidays on Wednesday.
The broader Topix fell 1.8% to end at 835.36.
FED MINUTES
Minutes from the US Federal Reserve March meeting released on Tuesday contributed to the bearish market sentiment.
The minutes drove US 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 US gains.
The senior dealer said that both domestic factors and the improved job market in the United States meant there was a chance for an upswing in the Nikkei.
"We do still hold a view that is constructive on the market. We have the BOJ (Bank of Japan), the signs of economic life in the US I would suggest this is temporary," he said.
