Nvidia impact? Japan's Nikkei crosses all-time high, breaking 1989 record - Hindustan Times
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Nvidia impact? Japan's Nikkei crosses all-time high, breaking 1989 record

Reuters |
Feb 22, 2024 09:19 AM IST

The Nikkei rose to as high as 39,017.64 as chip-related stocks jumped after US chipmaker Nvidia's outlook beat market expectations.

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.

A person walks in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo. (AP)
A person walks in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo. (AP)

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.

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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.

Read more: Nvidia quarterly profit soars to $12.3 billion: ‘AI hit tipping point’

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.

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