Japan’s benchmark Nikkei 225 index surged to a fresh record on Thursday, topping 59,000 points for the first time as investors dialed back expectations that the Bank of Japan will pursue further rate hikes. The index jumped 1% to a peak of 59,386.0 points before trimming some of those gains later in the session.
The broader TOPIX index also reached a record level, climbing 1.5% to 3,903.35 points. Market moves were driven in part by a shift in sentiment around the BOJ’s policy outlook and by positive momentum in technology shares.
Investor doubts about additional BOJ tightening intensified after the government announced the nominations of two so-called "reflationary" academics to the central bank’s board. The nominees, Tochiro Asada and Ayano Sato, have broadly advocated for lower interest rates, a weaker yen, and increased economic stimulus to spur growth. Their nominations, announced earlier this week, heightened expectations for looser monetary and fiscal policy under Prime Minister Sanae Takaichi.
Analysts and market participants said those appointments, combined with policy promises from the prime minister, helped lift sentiment toward Japanese equities. Takaichi has pledged a package of measures aimed at boosting growth, including increased fiscal spending and tax relief for consumers. Her policy agenda is now seen as more feasible after her ruling coalition secured a super majority in the lower house earlier this month.
Commenting on the nominations, OCBC analysts noted: "Dovish‐leaning BoJ nominees have reignited concerns the central bank may lag policy normalisation, weakening the JPY and steepening JGB curve." Market participants linked the prospect of looser monetary and fiscal conditions to increased liquidity that can flow into equity investments, supporting stock prices.
Technology names provided an additional lift to the market. SoftBank Group Corp. (TYO:9984) advanced by more than 4% on Thursday, contributing to the Nikkei’s gains. The broader technology rally was reinforced by strong quarterly results from artificial intelligence bellwether Nvidia, which reported bumper earnings for the January quarter and delivered an optimistic outlook for the current quarter. That set expectations that AI-related demand will continue to underpin the technology sector in the near term.
However, not all parts of the tech complex rose in unison. Nvidia’s report included an increase in inventories, which prompted some caution over the immediacy of chip demand tied to AI applications. Japanese chipmaking stocks underperformed their peers as a result. Advantest Corp. (TYO:6857) fell 1.9% and Tokyo Electron Ltd. (TYO:8035) also declined 1.9% during the session.
The market’s reaction on Thursday reflected a combination of shifting expectations for central bank policy, renewed fiscal ambitions from Japan’s government, and the influence of global technology earnings. While broad equity indices set fresh records, divergence within the technology sector highlighted lingering questions about the pace and composition of demand for semiconductor equipment and related products.
Summary
The Nikkei 225 hit a record of 59,386.0 points as investors cooled expectations for further BOJ rate increases, aided by tech gains after Nvidia’s strong earnings. TOPIX also reached a record high of 3,903.35. Government nominations to the BOJ board and Prime Minister Sanae Takaichi’s growth agenda supported the market rally, though some chip suppliers lagged.