The gauge rose as much as 1.6% on Monday, taking it a step higher on the climb back to its bubble-era levels. The rally follows the broader Topix Index’s recent record-breaking highs, as it rose to the highest point in nearly three decades.
While equities globally have hit new heights in recent months, the Nikkei 225 still needs to gain almost another 30% to surpass its record of 38,915.87 yen.
That was reached in the final trading session of 1989, before the index went on to lose more than half its value in three years after the economic bubble burst.
The brief breach of the 30,000 shows that “all sorts of investors are jumping in to buy Japanese equities with a totally bullish view,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute Co.
In data announced Monday, Japan’s gross domestic product grew an annualised 12.7% from the prior quarter in the three months through December, as exports continued to roar back, businesses started to invest again and government stimulus fuelled consumer spending despite the coronavirus.
The S&P 500 ended last week at an all-time high ahead of a three-day weekend, adding more than 1% for the week, as investors looked to signs that Washington is moving ahead with a spending bill.
Like the Dow Jones Industrial Average, the Nikkei 225 is a price-weighted measure. The two highest-weighted stocks, Uniqlo operator Fast Retailing Co and SoftBank Group Corp, make up almost 19% of the gauge and as such have an outsized impact on its movements. Both of those stocks have surged in the past year, benefiting from the pandemic and the latter from Masayoshi Son’s record-breaking buybacks.
The price-weighted nature of the index has attracted criticism over the years for failing to accurately reflect the state of Japan’s equity market — or as being “a Flintstones index from the abacus era,” in the words of one critic.
It is also notable for its lack of some of Japan’s biggest stocks, including gaming giant Nintendo Co and robotic automation specialist Keyence Corp.
The Nikkei 500, a gauge that contains these two firms, passed its bubble-era peak in September and has continued to hit fresh records since.