TLDR:
- Japan’s Nikkei stock index has passed 40,000 for the first time, gaining 1 percent to 40,308.85.
- Tech shares, like Tokyo Electron and Advantest, were among the biggest gainers.
Japan’s benchmark stock market index, Nikkei 225, has broken the 40,000 mark for the first time, showcasing a significant comeback after decades of stagnation. This milestone was achieved as the index gained 1 percent to 40,308.85 during morning trading on Monday. Investors had a positive outlook on Japanese firms following gains on Wall Street. Tech shares, including companies like Tokyo Electron and Advantest, experienced significant growth during this time.
Japanese stocks have seen a surge in popularity over the past year, with foreign investors taking advantage of the cheap yen and corporate governance reforms that enhanced shareholder returns. In 2023, the Nikkei rose by more than 28 percent, outperforming the S&P 500 in a remarkable year for the US stock market. In a historic moment, the benchmark index surpassed its 1989 record of 38,915.8, marking a resurgence in Japan’s stock market after facing numerous economic challenges.
Despite the stock market’s success, Japan’s overall economy has not experienced the same level of growth. Structural challenges such as a shrinking population and a rigid labor force have hindered economic progress. Last month, Japan officially entered a recession, causing it to relinquish its position as the world’s third-largest economy to Germany. The disparity between the stock market’s performance and the economy’s state highlights the complex dynamics at play within Japan’s financial landscape.
Furthermore, the revival of Japan’s stock market coincides with a continued rally in US shares driven by advancements in artificial intelligence. US tech companies have seen a surge in value, with chipmaker Nvidia’s market capitalization exceeding $2 trillion. This trend underscores the global impact of technological advancements on financial markets and investor sentiment.