Japan’s main stock index, the Nikkei 225, has soared to an unprecedented closing high, surpassing its previous peak set 34 years ago.
The index surged by 2.19% on Thursday, concluding the trading day at an impressive 39,098.68 points, exceeding the prior record of 38,915.87 points reached on December 29, 1989.
Asian technology shares experienced a notable boost following robust earnings reported by US chip giant Nvidia, particularly driven by the demand for its artificial intelligence processors.
Despite Japan’s economic recession, global investors are flocking back to the benchmark index, drawn by strong company earnings.
Furthermore, the depreciation of the Japanese currency has provided a tailwind for Japan’s exporters, rendering their products more competitive in foreign markets.
The Nikkei 225 previously reached its peak amid a period of soaring stock and property prices. However, less than three years after hitting that high, the index plummeted by almost 60% amidst an economic crisis.
Subsequently, Japan grappled with stagnant economic growth and deflation, a scenario where falling prices deter consumer spending on major purchases.
Recent official data revealed Japan’s unexpected recession in the final quarter of 2023, with the gross domestic product (GDP) contracting by a more severe-than-anticipated 0.4%, following a 3.3% decline in the previous quarter.
These figures also indicate Japan’s slide from the world’s third-largest economy to the fourth, trailing behind Germany.
While these statistics mark the first reading of Japan’s economic performance for the period and are subject to potential revisions, two consecutive quarters of economic contraction typically signal a technical recession.
