Key Points:
- Japan’s Nikkei share average hits a record high, surpassing the 1989 bubble-era peak.
- Nikkei closes at 39,098.68, marking a significant milestone in its rally.
- Chip-related stocks surge following Nvidia’s positive outlook on chip demand.
- Analysts anticipate further gains, with the 40,000 level becoming the next target for the Nikkei.
Japan’s Nikkei share average soared to a historic high on Thursday, surpassing the peak of the 1989 bubble-era, buoyed by gains in chip-related stocks following a positive outlook from U.S. chipmaker Nvidia (NASDAQ:NVDA).
Closing up by 2.19% at 39,098.68, the Nikkei 225 reached a pinnacle of 39,156.97 during the session, exceeding both the previous all-time closing and intraday highs recorded on Dec. 29, 1989, during Japan’s bubble economy. The index’s previous intraday high stood at 38,957.44, with the closing high at 38,915.87.
This surge marks a remarkable ascent of about 52% from its January 2023 low, fueled by a tech rally, corporate governance reforms, and increased profits for exporters due to a weaker yen. Tsutomu Yamada, senior market analyst at au kabu.com Securities, remarked, “For us traders, this marks the arrival of a new era. It feels like the stock market is telling us that we’ve finally escaped from deflation and a new world has opened up.”
Chip-related stocks led the rally, with Tokyo Electron jumping 6% and chip-testing equipment maker Advantest surging 7.5%. Screen Holdings and SoftBank Group also saw significant gains, rising more than 10% and 5%, respectively. The electric machinery sector emerged as the top gainer among the Tokyo Stock Exchange’s 33 industry sub-indexes, rising by 2.4%.
Market analysts like Tony Sycamore at IG in Sydney anticipate further gains for the Nikkei, with the 40,000 level becoming the next target. Sycamore stated, “If momentum names really start to get involved and add to positioning on the break of 1989 high, we could see a blow-off type move in the short term towards 42,000.”
