Japan’s Nikkei Index Hits Record High Above 41k on Tech Gains and Weak Yen

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Japan’s Nikkei 225 index reached a record high on Tuesday, driven by strong performance in technology stocks and a weak yen that boosted export-oriented shares and spurred foreign investment in local markets.

The Nikkei 225 rose over 1%, closing at 41,283.0 points, surpassing the previous peak set in late March. The broader TOPIX index also saw gains, rising 0.3%, and remained near its own record high achieved last week.

The surge in the Nikkei was primarily fueled by technology stocks, which mirrored an overnight rally in their U.S. counterparts. Investors are maintaining a positive outlook on the potential of artificial intelligence to drive growth in the sector. Notably, a report from Nikkei Asia revealed that Sony and other major Japanese chipmakers plan to invest approximately $5 billion to expand production over the next five years.

Export-oriented stocks also performed strongly, benefiting from the Japanese yen’s continued weakness, which has reached its lowest levels in 38 years. This devaluation of the yen has attracted foreign buyers to the Japanese market, as it makes Japanese exports more competitive globally.

The recent upswing in Japanese markets follows a series of weak economic indicators that have led to speculation that the Bank of Japan may have limited scope to further tighten monetary policy, following a historic rate hike in March. This sentiment has contributed to the weakening of the yen and increased foreign investment in Japanese equities. Data from the last week of June shows that foreign purchases of Japanese stocks reached their highest level in over two-and-a-half months.

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