Japan's Nikkei stock average surpassed 50,000 for the first time on October 27, closing at 50,512.32 amid gains in AI and semiconductor stocks. Easing U.S.-China trade tensions and expectations for Prime Minister Sanae Takaichi's economic policies further boosted investor confidence.
On October 27, the Nikkei stock average broke through 50,000 for the first time during Tokyo Stock Exchange trading hours, closing at 50,512.32, up 1,238.45 yen or 2.5% from the previous Friday. This marks a rise from the 40,000 level reached in March 2024. The index had surpassed the bubble-era all-time high of 38,915.87 in February 2024, about 34 years after its 1989 peak.
The surge was driven primarily by gains in AI and semiconductor sectors, fueled by rising U.S. stocks like Nvidia. High-priced chip-related firms such as Advantest Corp. and SoftBank Group Corp., which invests in chip makers, played key roles in pushing the index higher. Investor confidence was also bolstered by easing U.S.-China trade tensions, with ministerial-level talks in Malaysia concluding Sunday and paving the way to shelve a planned 100% tariff on Chinese goods set for November 1.
Prime Minister Sanae Takaichi's policies added to the optimism. Installed on October 21, her cabinet enjoys high approval ratings, with expectations for aggressive fiscal measures against rising prices. "Opinion polls by multiple parties show that the Takaichi Cabinet enjoys high approval ratings. There are growing hopes for her economic policies, such as for measures against rising prices," said Yutaka Miura of Mizuho Securities Co.
Historically, the Nikkei closed at its bubble peak of 38,915.87 at the end of 1989 before crashing to a post-bubble low of 7,054.98 on March 10, 2009, amid the Lehman Brothers collapse. The index began recovering with Prime Minister Shinzo Abe's second administration in December 2012, aided by Bank of Japan easing, and gains accelerated since 2023 due to overseas investors focusing on Japanese firms' capital efficiency. The TOPIX index, covering a broader range of stocks, also hit a new all-time high on Monday.