Asia rallies as Japan shares surge to record peak

Major Asian stock markets experienced a significant rally on Thursday as Japan’s Nikkei 225 index surged to a historic record peak in Tokyo, driven by robust corporate earnings and the continued weakening of the yen. Investors across the region intensified their buying activity after the Japanese benchmark surpassed its previous all-time high set during the asset bubble era of 1989, fueled by optimism regarding global semiconductor demand and domestic economic reforms. This milestone marks a definitive turning point for the world’s fourth-largest economy, which has spent decades struggling with deflationary pressures and stagnant growth. The surge in Tokyo acted as a primary catalyst for other regional markets, with indices in South Korea, Hong Kong, and Australia also posting notable gains. Tech-heavy markets were particularly responsive as global demand for artificial intelligence infrastructure continues to boost the valuation of chipmakers and hardware manufacturers. The Nikkei’s performance was further bolstered by the Bank of Japan’s maintained ultra-loose monetary policy, which has kept the yen competitive against the dollar, thereby enhancing the profit outlook for Japan’s major exporters such as Toyota and Tokyo Electron. Financial analysts point to improved corporate governance and the implementation of more shareholder-friendly policies as the underlying reasons for this renewed international confidence in Japanese equities. Foreign capital has flowed into the Tokyo Stock Exchange at a record pace, as investors shift away from a cooling Chinese economy in search of more stable returns in developed Asian markets. Market strategists suggest that the psychological barrier of the previous 1989 record has now been broken, potentially paving the way for continued upward momentum throughout the fiscal year.