Economy & Tech

Nikkei Stock Index Surpasses 40,000 for the First Time

Fueled by tech stocks, investor optimism, and a weak yen, the Nikkei closed at 40,109 — nearly 11 years after Japan implemented its monetary-easing policy.

Published

2 months ago

March 5, 2024

Takehiko Nagata

The afternoon closing price of the Nikkei Stock Average reached an all-time high in the 40,000 range on March 4. Chuo Ward, Tokyo. (©Sankei by Yoshinori Saito)

On March 4, the Nikkei Stock Average climbed above the 40,000 mark for the first time in history. It closed at 40,109.23, up 198.41 points from March 1. At one stage, the index gained more than 400 points.

The Nikkei index had already surpassed its all-time high on February 22 when it reached 39,000 for the first time. That was a 34-year high since December 29, 1989, during Japan's bubble economy. Just six business days later, it surpassed the 40,000 milestone.

Investor funds, fueled by expectations of improved corporate performance and better governance, are flowing into the Tokyo market. A strong United States economy, combined with the weakening yen against the US dollar, is also supporting the rise of Japanese stocks.

*A board in Tokyo shows the closing price of the Nikkei 225 on February 22, 2024. (©Sankei by Yoshinori Saito)*

Tech Stocks Lead the Market

Since the start of 2024, the Nikkei average has risen by approximately 7,000 points. This has led to bullish forecasts in the securities industry, ranging from 43,000 to 45,000.

As negotiations intensify toward the annual spring wage negotiations, many major companies have already announced significant wage increases. This has fostered strong expectations for a virtuous cycle of rising prices and wages.

In the United States, a series of economic indicators have been released, with the Dow Jones Industrial Average remaining in record-high territory. The Nasdaq Composite, which has a tech-heavy focus, reached an all-time high on February 29. Notably, the surge in the Nikkei index on March 4 was driven by semiconductor-related stocks.

Abenomics

After reaching a record closing high of 38,915.87 in December 1989, the Nikkei average gradually declined following the collapse of the bubble economy. It fell to 7,054.98 in March 2009, the year after the Lehman shock.

In December 2012, the second Shinzo Abe administration began. It introduced economic policies collectively called "Abenomics." In April 2013, the Bank of Japan began large-scale monetary easing, and stock prices began to rise.