Stocks in Japan Hit Record High, Surpassing 1989 Peak

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Stocks in Japan rose to a record high on Thursday, surpassing a level last seen 34 years ago when the country was at the peak of its economic ascendancy, before it sank into decades of low growth.

The Nikkei 225, a benchmark stock index in Japan, moved 2.1 percent higher to 39,098, breaking through its previous high of 38,915.87 reached on Dec. 29, 1989. Stocks in Japan have been on a broadly steady rebound for over a decade, but they have moved sharply higher in the past year. The Nikkei is up 17percent since the start of 2024.

Thursday’s rally came after bumper earnings from Nvidia, the maker of chips used in artificial intelligence, started a global wave of rising stock prices. The Stoxx Europe 600 index hit a record, and S&P 500 futures were more than 1 percent higher.

What has changed in Japan’s economy to spark the stock surge?

Stocks in Japan have looked cheap because of a weak yen, which has been a boon to exporters that make their profits overseas. Important changes to the corporate sector have also given shareholders more rights, allowing them to push for changes that favor their stock holdings.

And in a contrast with other parts of the world, rising inflation in Japan recently has been seen as a sign that things are headed in the right direction, after decades of falling prices and sluggish economic growth discouraged people and companies from spending.

Japan’s stocks have also benefited from a downturn in China, where economic growth has slowed under the weight of a plunge in real estate and a host of systemic and political challenges. Chinese markets have recently traded at low points that haven’t been reached since a rout in 2015.

Foreign investors are playing an important role in the market’s rise.

Investors from abroad have been enthusiastic buyers of Japanese stocks, pumping a net $14 billion into the market in January, according to data from Japan Exchange Group, a stark shift from the roughly $3 billion that they pulled out in December.

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