Japan's benchmark Nikkei 225 stock average hit a record intraday high on Wednesday morning, October 29, 2025. Investors were encouraged by overnight gains in U.S. stocks amid easing concerns over U.S.-China trade tensions. At 9:37 a.m., the index stood at 50,909.17, up 689.99 points, or 1.37 percent, from Tuesday.
Japan's stock market showed strong momentum as the Nikkei Stock Average surpassed the key 50,000 threshold on Monday, October 27, 2025, rising 10,000 points in three months. The surge was driven by expectations for Prime Minister Sanae Takaichi's new administration, gains in U.S. stock markets, and the artificial intelligence boom.
Expectations for the economic policies of Prime Minister Takaichi's administration are bolstering the stock rise. The Nikkei average gained more than 6,000 points in the roughly month and a half between former Prime Minister Shigeru Ishiba's resignation announcement and the formation of the Takaichi administration. In her policy speech on Friday, the prime minister made clear her stance of prioritizing the economy, stating that she would implement aggressive fiscal spending to build a strong economy. In particular, companies in defense and other sectors prioritized by the prime minister saw significant gains, with Kawasaki Heavy Industries Ltd. reaching an all-time high on Monday for the first time in 36 years. The stock rally has spread across a wide range of fields including the automotive, infrastructure, and nursing care sectors. An official at Mitsubishi UFJ Morgan Stanley Securities Co. views the 50,000 mark as merely a waypoint, forecasting that the index could rise to 53,000 next year if corporate earnings continue to improve.
However, with the new administration's growth strategy yet to be realized, external factors are a major contributor to the current stock surge. The U.S. Federal Reserve Board is expected to decide on a second consecutive interest rate cut at this week's Federal Open Market Committee meeting in response to the deterioration of the employment situation. Anticipating a boost to the economy, the Dow renewed its all-time high on Friday, and the Tokyo market followed suit. In addition, ministerial-level trade talks between the United States and China held in Malaysia through Sunday led to the expectation that China would postpone strengthening its export restrictions on rare earths, spreading a sense of relief across the market.
Another factor supporting the global stock market rally is the market expansion of AI and semiconductors. Nvidia Corp., a major U.S. semiconductor company essential to AI, saw its market capitalization reach $4 trillion (about ¥580 trillion) in July, a world first. A U.S. stock index composed primarily of semiconductor-related stocks has risen about 40 percent since the start of this year, significantly outperforming the growth rate of the Dow. In Japan, rising stock prices of companies with significant influence on the Nikkei average, such as semiconductor-related companies Advantest Corp. and Tokyo Electron Ltd., as well as SoftBank Group Corp., have pushed up the Nikkei average. However, some are concerned that the rapid rise of AI-related stocks could lead to an AI bubble. The International Monetary Fund cited overly optimistic expectations for AI as one of the downside risks in its World Economic Outlook published this month. “Concerns about overheating in AI-related stocks are beginning to emerge in some quarters,” said Hikaru Yasuda of SMBC Nikko Securities Inc.
The intraday high on October 29 reflects the continuation of this positive momentum, though warning signs of overheating detached from the true state of the economy are also noted.