Traders shelter from Japan crisis

Private investors are concerned that the stimulus plan announced by the Bank of Japan will not go far enough in promoting recovery.

"The Japanese economy has limped through the last few decades and only recently shown signs of a return to optimism. The Government now finds itself printing a further 10trn yen to reassure the export trade and is relying once again on its people to finance the relief effort," said Mike McCudden, head of derivatives at Interactive Investor.

Investors are frantically selling off stocks that they deem directly exposed to the disastrous events in Japan.

"Traders are taking refuge from the continuing catastrophe,” McCudden added. "As the markets try to rationalise the short- to medium-term impact the aftermath of the Japanese tsunami will have on global markets, we have seen spread-betting clients make some classic plays amidst the panic selling."

These include selling off stocks of any company associated with the nuclear power industry, including steam turbine component manufacturers as well as uranium miners, and buying up those of renewable-energy companies.

"Overnight and this morning we have seen short-term traders trying to sniff out buying opportunities amidst the sell-off. Betting against the trend is fraught with danger and further negative sentiment in the coming days could well propel the market to new lows," McCudden continued.

"Many short-positioned traders since the weekend have been locking in on some profits and waiting, along with the rest of us, to see what further developments come out of Japan."