The Nikkei 225 index in Japan reached an all-time high on Tuesday, driven by strong performances in technology stocks and a declining yen that boosted shares oriented towards exports, leading to increased foreign investment in local markets.
The Nikkei 225 climbed over 1%, closing at 41,283.0 points, surpassing the previous peak set in late March. The broader TOPIX index also experienced gains, rising 0.3%, remaining close to its own record high achieved just the week before.
The surge in the Nikkei was primarily powered by the technology sector, following a rally in U.S. technology stocks. Investors are optimistic about the growth potential driven by artificial intelligence in this sector. A report from Nikkei Asia highlighted that major Japanese chipmakers like Sony plan to invest around $5 billion to expand production over the next five years.
Export-oriented stocks also saw strong performance, benefiting from the weakening Japanese yen, which has reached its lowest levels in 38 years. This depreciation of the yen has attracted foreign investors to the Japanese market, making Japanese exports more competitive globally.
The recent bullish trend in Japanese markets comes after a series of weak economic indicators raised speculations that the Bank of Japan may have limited room to further tighten monetary policy following a significant rate hike in March. This sentiment has contributed to the yen’s depreciation and an increase in foreign investment in Japanese equities. Data from the last week of June indicates that foreign purchases of Japanese stocks surged to their highest level in over two and a half months.
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