In the first 15 minutes of trading on Monday morning, the Nikkei Trade 225 topped the 40,000 threshold for the first time. It added 0.84%, or 334.87 points from Friday, reaching 40,245.69 not long after the opening bell. The benchmark index continues to rise after breaking a record last month that stood for more than 34 years. That record was set on December 29, 1989, before the country’s financial bubble burst. On February 22 this year, it rose above 39,000 for the first time and continued to break records last week, ending at 39,910 on Friday, up 1.9% from the previous day. 


Reasons for Nikkei’s Rise

The Nikkei’s rise, which is being powered by semiconductor-related stocks, has surprised many, but not Warren Buffett. His investment company, Berkshire Hathaway, invested in Japan’s five biggest trading houses: Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo in 2020. Last year, he increased the stakes from 7.4% to 8.5%. In a letter to investors, Buffett spoke in glowing terms about Japanese trading firms, boosting investor confidence in these companies. According to analysts, other factors driving the market are advances in corporate governance, the weakening of the yen against the dollar, which continues to boost exporters, and modest inflation rates.  

“The strong performance of global equity markets, including the MSCI World, Japanese Nikkei 225, Nasdaq, and S&P 500 indexes, which all closed at record highs last week, provide favorable trade winds for Asian markets as the new week begins on Monday,” said Stephen Innes of SPI Asset Management. “The positive sentiment is driven by several factors, including the hope for US interest rate cuts, signs of cooling inflation, and a surge in interest surrounding artificial intelligence within the big tech sector. These factors collectively contribute to the positive tone in global markets, which is expected to bolster Asian markets and inspire confidence among investors as they commence trading for the week.”

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