Japan’s Nikkei Index Surges Past 35,000, Marking a 34-Year High

Japan’s Nikkei share average soared, reaching its highest level since February 1990, as it broke through the 35,000 mark. This significant surge in the index was driven by a combination of factors, including a weaker yen and market reassessment regarding the Bank of Japan’s monetary policy.

Key Factors Influencing the Nikkei’s Rise:

1. Weaker Yen Boosting Exporters: The yen’s fall of 0.9% against the U.S. dollar was a crucial factor. A weaker yen generally benefits Japanese exporters as it increases the value of their overseas earnings when converted back into yen.
2. Weak Wage Growth Data: Published data showed that workers’ real wages in Japan shrank for the 20th consecutive month in November. This unexpected trend has led to a delay in tightening monetary policy by the Bank of Japan, contrary to what officials hoped to see in wage gains.
3. Impact of Recent Earthquake: The strong earthquake that hit western Japan also played a role in shaping market expectations about the timing of the Bank of Japan’s policy normalization.
4. Performance of Specific Companies: Companies like SMC Corp, Itochu Corp, and Hitachi Ltd saw significant gains, leading the surge in the Nikkei. SMC Corp, in particular, reported a 5.07% gain, topping the list of performers.
5. Influence of Wall Street: The rally in the Nikkei was also bolstered by positive performances on Wall Street, where megacaps had a successful trading day.
6. Broader Topix Index Also Up: Alongside the Nikkei, the broader Topix index rose by 1.81% to 2488.65, aligning with the overall bullish trend in Japanese stocks.
7. Investor Sentiment: The market’s response indicates a positive investor sentiment, as they continue to assess the potential steps of the Bank of Japan amidst the current economic backdrop.

This breakthrough for the Nikkei, reaching levels not seen in nearly 34 years, highlights a significant moment in Japan’s stock market history and reflects the complex interplay of economic, corporate, and geopolitical factors influencing investor behavior​​​​​​​​.