* Nasdaq suffers biggest one-day fall since 2011
* Funds rotate out of momentum stocks to bonds, emerging
* Nikkei nearing major chart support, break to be bearish
By Wayne Cole
SYDNEY, April 11 Japanese shares are set to open
sharply lower on Friday after Wall Street took a fresh tumble in
what is increasingly looking like a major portfolio shift from
equities to bonds, emerging markets and, to a lesser extent,
Still, other Asian markets should prove resilient, as they
have done all week, given fund managers seem to be re-weighting
in favour of emerging stocks as they trim their large exposure
to momentum plays in the technology and biotechnology sectors.
The MSCI emerging markets index touched its
highest for the year so far on Thursday having climbed for three
Japan, however, is vulnerable both to the selloff in tech
stocks and to the strength of the yen, which crimps exports and
corporate profits. The opening was expected to be rough with
Nikkei futures quoted at 14,070 compared to a close in
the cash market of 14,300 on Thursday.
The Nikkei index is now threatening to break major
chart support between 14,000 and 14,200, a zone that has held
solid for the past six months.
Indeed, so important is this support area that dealers
suspect it has been protected by buying from public pension
funds in a form of semi-official intervention.
Many expect the same sort of bids to emerge on Friday as it
would be crucial to prevent a close under 14,000, which would be
taken as a very bearish event technically.
Still, it will be hard to hold given the extent of losses on
Wall Street, where the Nasdaq suffered its worst single-day drop
since 2011. The tech-heavy index sank 3.1 percent, while
the Nasdaq biotechnology index plunged 5.6 percent.
The selling rippled through the broader market pulling the
Dow down 1.62 percent and the S&P 500 2 percent.
With stocks out of favour government bonds were set to
benefit and yields on the benchmark 10-year U.S. Treasury note
fell to their lowest since Feb. 27 at 2.62 percent.
Even Greece managed a triumphant return to the bond market
just two years after its default placed it at the centre of the
euro zone debt crisis.
Greece drew solid demand at its five-year bond sale, which
aimed to raise three billion euros and offered a yield of 4.95
percent, beating Athens' 5 percent target. It had been expected
to draw in U.S. investors including hedge funds.
The afterglow from the Greek deal combined with the latest
drop in U.S. yields helped the euro higher on the dollar. On
Friday, the single currency was up at $1.3885 having
rallied two full cents over the past four sessions.
The dollar also lost ground to the yen, falling to 101.40
from a high of 102.14 on Thursday. The dollar is now
nearing major chart support around 101.20 that has held for much
of the past three months and a breach would be bearish.
The dollar index also hit a three-week low of 79.330,
well below a seven-week high of 80.599 set only last week. It
last stood at 79.407.
A drop in China's exports reported on Thursday stoked
concerns about demand in the world's second-biggest economy and
pushed the price of oil down toward $107 a barrel. OPEC also
lowered its 2014 forecast for oil demand.
Brent crude fell 54 cents on Thursday to $107.44 a
barrel, after gaining $2.16 over the previous two days. U.S.
crude was quoted down 10 cents on Friday at $103.30 a barrel.
Gold hit a 2-1/2-week high as the dollar dropped. Spot gold
was hovering at $1,318.41 an ounce, off a peak of
(Editing by Shri Navaratnam)