Nikkei 225 Index Breaks a 35-year Record – How Long Will The Rally Last?

The Asian markets seem to be coping well with the technological boom and the rise of artificial intelligence, pushing most stock indices in the region to new highs. However, the Japanese market achieved a significant milestone, breaking its previous record and reaching a new all-time high of over 40,000 points.

The Nikkei 225 index came in time with a deflating Yen and a drop in economic factors. So, how long will the Japanese index market last, and what is the new destination for the Nikkei index?

What’s Happening with Asian Indices?

From the beginning of 2024, most indices markets experienced an uptrend amidst increasing optimism and growth in the technological sector, including manufacturing semiconductor processors used in artificial intelligence systems.

This trend increased the earnings for Asian chipmakers, especially for Nikkei 225 index companies, considering their central role in manufacturing and development.

The Taiwan stock index market was also among the top performers, influenced by the increasing investments in AI chipmaking and relevant technologies. TWII marker went up by 10% in the first quarter of 2024.

However, the news from China is not as optimistic as the Shanghai Composite index keeps fluctuating, taking prices from 3,000 points down to 2,650, then again up to 3,000.

Nikkei 225 Index Record-Breaking Run

The Nikkei share price milestone comes after a series of record-breaking surges that outperformed its previous all-time high in 1989. 

Starting on February 22, 2024, the Nikkei index surpassed the previous record of 38,900 points and moved beyond 39,000. However, during the first days of March, it crossed 40,000 points and closed at 40,100 by March 4.

Besides the boom in AI technologies and chipmaking manufacturing in Japan, the Nikkei news came after corporate governance reforms and investors’ tendency to withdraw their capital from Chinese markets to Japan.

Most Chinese stock markets, such as Shanghai, HSI and Shenzen indices, are experiencing a downward slope. This decrease is attributed to the state policies against the private sector and the cautious investor mood before the annual National People’s Congress.

The NPC meeting is a yearly conference where the country’s policymakers set the growth target and determine if any reforms or regulations need to be implemented.

Nikkei 225 Predictions for 2024

It is important to note that despite the consistent run of the Nikkei 225 index in 2024, reaching a new all-time high of over 40,000 points, most economic factors in Japan are experiencing a downward trend.

Underperforming indicators, such as a below-average inflation rate and a slipping GDP, have driven the country’s economy down so much that economists rank Japan’s economy as the fourth largest economy behind Germany.

Experts are now split into two categories. One group believes that the Nikkei share price still has room to go upwards and set a new floor over the 40,000 mark.

However, others argue that the underperforming economy will eventually pull the Japanese index market down to the range of 37,000 points.