The Nikkei 225 Index of the Japanese stock market hit a 34-year high on Friday, closing at 36897.42 points, marking a new milestone in the “big bull” market. This is the second consecutive day of record highs for the index, which has risen by 2.04% this week and more than 10% since the beginning of the year.
During the trading session, the index briefly surpassed the 37,000 point mark, a level not seen in over three decades. This surge in the market has been attributed to several factors, including comments from Bank of Japan officials indicating that loose financial conditions are likely to continue. This “dovish” stance has been perceived as a signal that the central bank’s potential “normalization” would not implement the type of rate hikes that have historically boosted the yen.
Additionally, strong performance reports from major companies, such as SoftBank and Toyota, have also contributed to the market’s confidence. SoftBank Group, in particular, closed up 8.72%, ranking third among the Nikkei Index constituent stocks. The company announced strong financial results for the last quarter, with gains from the Vision Fund significantly exceeding market estimates.
However, some analysts are casting doubt on the sustainability of this upward trend. Despite the recent surge, there are concerns that the three factors supporting the market – cheap price-to-earnings ratio, global monetary policy, and the revival of Japanese corporate governance – may not be as robust as they seem. Additionally, there are few signs of significant economic growth momentum.
The recent rebound in Japanese stocks has left some market observers puzzled. Senior stock market strategist Pelham Smithers remarked, “The Japanese stock market this year is a bit strange, and today is even stranger,” noting that the Nikkei’s closing gains were achieved when the number of decliners exceeded the number of gainers.
As the Nikkei 225 Index continues to reach new heights, the question remains: how long can this momentum be sustained? With a combination of cautious optimism and skepticism from industry experts, the future trajectory of the “big bull” market is uncertain. Only time will tell whether the current surge in the Nikkei Index is a temporary anomaly or the beginning of a sustained uptrend.