On Tuesday, Japan’s Nikkei 225 index hit a record high, propelled by robust technology stock performances and a weakening yen that enhanced the appeal of export-driven shares, resulting in a surge of foreign investment in domestic markets.
The Nikkei 225 rose by more than 1% to close at 41,283.0 points, eclipsing its previous high from late March. The broader TOPIX index also saw a rise, climbing 0.3% and remaining close to its own recent peak from the previous week.
The surge in the Nikkei was largely fueled by the technology sector, in the wake of a boost in U.S. tech stocks. Investors are expressing optimism about the growth prospects linked to artificial intelligence within this industry. A report from Nikkei Asia revealed that leading Japanese chipmakers such as Sony are planning to allocate approximately $5 billion to enhance production capabilities over the next five years.
Stocks focused on exports also performed well, benefiting from a depreciating yen, which has fallen to its lowest point in 38 years. This drop in the yen has made Japanese exports more competitive on the global stage, drawing foreign investors to the market.
This recent upward trend in Japanese stock markets follows a series of disappointing economic indicators, leading to speculations that the Bank of Japan may have limited capacity to tighten monetary policy any further after a significant increase in rates back in March. This outlook has reinforced the yen’s decline and boosted foreign investment in Japanese stocks. According to data from late June, foreign purchases of Japanese equities surged to their highest level in over two and a half months.
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