Key Points:
- The Nikkei 225 Stock index closed above 40,000 points for the first time, propelled by strong investor interest and buoyant market sentiment.
- Analysts project further gains in Japanese equities, with estimates suggesting the index could reach as high as 43,000 points by year-end.
- Technology shares surged on Monday, supported by a rally in U.S. stocks, with chip-related companies leading the gains.
- Despite the Nikkei’s record high, the broader Topix index experienced a slight decline during the trading session.
Japan’s primary stock benchmark, the Nikkei share index, reached a historic milestone on Monday, surpassing the 40,000-point mark for the first time and closing at a record high. The surge was fueled by strong investor interest, particularly overseas, driven by confidence in corporate governance reforms and attractive valuations.
Benefiting from a rally in technology shares mirroring their U.S. counterparts, the Nikkei index rose by 0.5% to settle at 40,109.23 by the end of the trading session. This climb marked a trend that has seen the index steadily increase over five consecutive weeks.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, expressed optimism about the market’s future trajectory, foreseeing further growth despite potential short-term fluctuations. Overseas investors, adopting a medium- to long-term perspective, have been prominent in driving the market’s upward momentum.
Analysts project continued gains in Japanese equities, with some estimates suggesting the index could reach as high as 43,000 points by the end of the year. This positive outlook reflects expectations of enduring changes in corporate behavior and increased foreign investment.
While foreign interest has been instrumental in driving the market’s ascent, there are indications of a shift in sentiment among domestic retail investors, who have historically shown less enthusiasm for Japanese stocks. Rising purchases of Japan-focused exchange-traded funds, eligible for local tax breaks, indicate growing confidence among individual investors in their home market.
The surge in Japanese tech shares on Monday was buoyed by the ongoing artificial intelligence rally in U.S. stocks, with Advantest and Tokyo Electron, key players in chip-testing and chip-making equipment, respectively, leading the gains. Renesas Electronics, a semiconductor manufacturer, and JSR Corp, a maker of chip-making materials, also posted notable increases following positive news developments.
Despite the Nikkei’s record-setting performance, the broader Topix index experienced a slight dip, ending the day down by 0.1% at 2,706.28.
