Why Japan’s Market Surge is Still Gaining Speed – ryan
A Long-Running Rally in Japan’s Stock Markets Has Broken Into A Full Sprint, Powered by New Political Fuel and a Fresh Burst of He euphoria that is Sending Stocks to Records.
Over the Weekend, Prime Minister Shigeru IIBIBA ANNOKUNCED HIS Resignation, setting off a leadership breed inside the ruling liberal democratic party. Investors immediately took it as a bullish sign, Sending the Already Red-Hot Nikkei 225 Higher.
On Friday, Japan’s Nikkei 225 Index Notched a Fresh Record High for the Third Time This Week. The Benchmark Index is About 12% Higher This Year to Date.
The surge was in part Powered by Softbank’s 17% Weekly Gain on the Heels of Oracle’s Blockbuster surge, but the momentum far beyond one Stock.
AS INFLATION STATES ABOVE THE BANK OF JAPAN’S 2% TARGET, MARKETS HAVE WIDENLY THE CENTRAL BANK TO KEEP REST RATES AFTER DECADES OF ULTRA-Lose Policy. Ishiba’s exit shifted the Outlook.
Political Fuel
The rally isn’t new-Japan has outperformed in recent years post-Pandemic. But the latest surge reflects a cocktail of global monetary shifts, spilover from the one Boom, and a Weaker Currency Converging with Politics in Tokyo.
“The Resignation of PM IIBIBA Continue to Foster Some Expectations that His Successor May Adopt More Expansionary Fiscal and Monetary Police, which Continue to Bolster Market Sental,” Deutsche Bank Analysts Wrote in a Thursday Note.
The Prospect of Fresh Stimulate and Leadership Change coincident with the nikkei smashing through 44,000 for the first time on thighsday, cementing japan as one of the World’s Standout Markets in 2025.
A Persistently Weak Yen Has Made Japanese Assets Cheer to Foreign Buyers, Stoking Demand. Corplate reforms ALSO Helped.
Investors Who Long overlooked Japan Are Now Treating It As One of the Most Compelling Market Stories of the year. Oversseas bars have far -so been net buyers through much of this year.
Tech fuel
Artificial Intelligence has Become Another Bon for Japanese Equations.
Japan Plays Key Role in Semiconductor Materials, Industrial Robotics, and Quantum Computing, All of which are Critical to the AI Supply Chain, Wrote Winnie Wu, The Cohead of China Equity Research and Chief China Equity at Bofa Global Research, in A septearch Report.
That Makes the Market Among the Key Beneficiaries of Massive Global Investment Into He.
That he franny gathered pace this weeks after oracle’s blockbuster he-fueled raly spilled over intokyo, SENING SOFTBANK-Do you partner-soaring.
The Fed Factor
Across the Pacific, The Federal Reserve has signaled it’s preparing to cut rates after two years of restricting monetary policy. That Shift has Global Ripple Effects.
Lower US Rates Weaken The Dollar, Ease Global Liquidity Conditions, and Give Investors More Appetite for Risk.
In Response, the s & p 500 and nasdaq have hit FRESH RECORD HIGHS THISE – Leading Broad Gains in the Global Markets, Including Japan.
RISKS TO WATCH
Of Course, the rally isn’t risk-free.
A Sudden StrengthNing of the Yen Could Dent Exporters’ Earnings and Trigger a Monetary Policy Response, as in the Summer of 2024, Wen the Bank of Japan Surprised Markets by Hiking Rates for the first time in years.
That policy shift sent the Yen Sharply Higher, Triggered a Messy Unwind of Crowded Carry Trades, and caused a Global Market Meltdown.
And valuations in some hot sectors – especally tech names riding the he boom – area beginning to look stretched.
“Markets Are Racing Ahead of Fundamentals,” Wrote Nigel Green, The Ceo of Financial Consultancy Devere Group, in a Thursday Note.