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Japan’s Nikkei 225 Stock Average surges beyond significant threshold of 40,000 points

Japan’s Nikkei 225 Stock Average has surged past the psychologically significant milestone of 40,000 points for the first time on Monday, as reported by Bloomberg. This breakthrough indicates the potential for further upward momentum in its recent upward trajectory. The blue-chip index experienced a remarkable upswing of up to 1 percent, reaching a new intraday peak of 40,301.30. The surge, primarily propelled by gains in the technology sector, notably highlighted by Advantest Corp’s stellar performance, underscores investor confidence and favorable market conditions.

Charu Chanana, a strategist at Saxo Capital Markets, emphasized the significance of the Nikkei 225 reaching the 40,000 mark, describing it as a key psychological level that could introduce some resistance for the index, potentially causing volatility. Despite potential short-term fluctuations, Chanana expressed optimism about prevailing structural factors and the weakness of the yen, which are expected to sustain bullish sentiment and alleviate concerns of overvaluation in Japanese stocks.

The recent surge in the Nikkei index reflects an ongoing trend of investor optimism, buoyed by improvements in shareholder returns, currency dynamics, and robust corporate earnings. Last month, the Nikkei reached its peak from 1989, attracting international investors to Japan’s leading companies. Warren Buffett’s endorsement of Japanese trading houses further boosted confidence in the market, while concerns about a slowdown in China prompted a reallocation of capital toward Japanese equities. Foreign investors continue to demonstrate confidence in the prospects of Japanese stocks.

Major asset managers such as BlackRock Inc and Amundi Asset Management anticipate sustained earnings growth and positive shifts in corporate governance as drivers for continued market strength. However, despite the prevailing bullish sentiment, concerns persist regarding the possibility of overheating in the stock market.


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