Japan’s Nikkei share average achieved a significant milestone, closing at its highest level in 34 years, fueled by a surge in technology shares following overnight gains in U.S. counterparts.
Additionally, a weakened yen provided a boost to Japanese exporters, further contributing to the index’s impressive performance.
The Nikkei index surged by 2.01% to reach a closing level of 34,441.72, marking its highest close since February 1990.
This rally also allowed the index to breach the 34,000 mark for the first time since March 1990.
The broader Topix index also experienced gains, rising by 1.3% to reach 2,444.48, its highest level since March 1990.
According to Masahiro Ichikawa, the chief market strategist at Sumitomo Mitsui DS Asset Management, the Nikkei’s ascent to the 34,000 level spurred investors to increase their stock holdings.
While the S&P 500 and Dow in the United States closed lower on the same day, the technology-heavy Nasdaq managed to edge higher.
This provided additional momentum to technology shares in Japan.
The Japanese yen’s depreciation against the U.S. dollar during Asian trading hours was viewed as a tailwind for Japanese stocks.
This shift in currency exchange rates followed the yen’s earlier gains against the dollar, which had dampened market sentiment and limited the Nikkei’s growth towards the end of the previous year.
Shuutarou Yasuda, a market analyst at Tokai Tokyo Research Institute, highlighted the significance of this currency movement.
A weaker yen is particularly advantageous for Japanese exporters, as it increases the value of their overseas profits when repatriated to Japan in yen terms.
As a result, companies like Fast Retailing, the operator of the Uniqlo clothing retail chain, saw their shares rise by 3.83%, becoming a significant contributor to the Nikkei’s success.
Other notable gainers included chip-making equipment manufacturer Tokyo Electron (1.91% increase), ceramics maker Kyocera (6.09% increase), and Sony Group (3.82% increase), which played a crucial role in driving up the Topix index.
Electronics manufacturer Keyence also recorded a substantial jump of 4.86%.
However, computer maker Fujitsu faced a setback, with its shares falling by 1.94%, making it the biggest percentage loser of the day.
Among the 225 components of the index, 176 witnessed gains, while 47 experienced declines, and two remained unchanged, underscoring the overall positive sentiment in the Japanese stock market.