Japan’s Nikkei share average crosses all-time high, breaking 1989 record

By Thomson Reuters Feb 21, 2024 | 9:35 PM

TOKYO (Reuters) – Japan’s benchmark Nikkei share average hit an all-time high on Thursday, breaking levels last seen in 1989 during the halcyon days of the bubble economy. The Nikkei rose to as high as 39,017.64 shortly after the midday break, as chip-related stocks jumped after U.S. chipmaker Nvidia’s outlook beat market expectations. The previous record was 38,957.44, scaled on the last trading day in December 1989.

On that day, the benchmark index closed at 38,915.87. The 34 years it has taken to regain its footing is a record, too, for a major market and is a decade longer than Wall Street took to recoup losses from the 1929 crash and Great Depression.

The Nikkei’s rally has defied a recession in Japan, wars in Europe and the Middle East, a global inflation shock and rising rates worldwide. Trade exposure has helped insulate it from deteriorating domestic demand while a weak currency has boosted exporters’ earnings.

The milestone also finally draws a line under decades of lacklustre performance that had kept global investors away.

Corporate governance changes in Japan are driving buybacks and unwinding cross-holdings, and foreigners are now spurring the rally with the likes of large investment from Warren Buffett in 2020 putting the spotlight on attractive valuations.

A robust earnings season and a falling yen, which is back near 150 per dollar level, as well as expectations that the Bank of Japan will stick with ultra-easy monetary policy for a while yet have supercharged the market at the start of 2024.

A Reuters poll published on Feb. 22 showed analysts had raised year-end forecasts from 35,000 in November to now expect the Nikkei at 39,000 at the end of 2024.

(Reporting by Junko Fujita, Ankur Banerjee, Rae Wee; Editing by Chang-Ran Kim and Shri Navaratnam)