Japan’s benchmark Nikkei breached the 40,000-point level for the first time on Monday led by a rally in technology shares. The Nikkei share average was last up 0.7% at 40192.48.
The rally in Japan’s technology shares came amid the ongoing artificial intelligence boom in US stocks, which once again pushed the S&P 500 and Nasdaq to record highs overnight on Friday.
The blue-chip gauge rose as much as 1% to 40,301.30 on Monday, a fresh intraday record. Tech shares led the rally, with Advantest Corp. among the top performers.
The broader Topix was down 0.02% at 2709.07.
Expectations that the US Federal Reserve may be able to cut interest rates as early as June boosted global market sentiment.
The Nikkei is up over 20% so far this year, while the Topix is up nearly 15%.
Japanese stock markets have been hitting new peaks for the first time in 34 years, crossing the lifetime high of 1989 last month, boosted by foreign inflows amid corporate governance reform, cheap valuations, a weaker yen, and booming corporate profits.
Moreover, Warren Buffett’s endorsement of Japanese trading houses last year boosted confidence in the nation’s market, and concerns over a slowdown in China prompted many funds to switch into Japan, Bloomberg reported.
Foreign investors remain bullish on Japanese stocks. BlackRock Inc., the world’s biggest asset manager, and Amundi Asset Management, Europe’s largest money manager, expect earnings growth and changes in corporate governance will keep the strength going.
Tokyo Stock Exchange is also encouraging companies to publish reports on their plans to boost equity valuations. Some have announced share buybacks and dividend hikes. Management buyouts are on the rise and activist investors are also stepping up their campaigns, the Bloomberg report added.
About a third of Nikkei companies, excluding the financial sector, have a net cash position, bolstering the cause of activist investors and the TSE.
(With inputs from Bloomberg)
