Nikkei 225 Rockets to All-Time High of 44,000, Fueled by 7% Tech Stock Rally; 46,000 Next?

TradingKey - On September 9, the Nikkei 225 Index achieved a historic breakthrough during early trading, surpassing the 44,000-point mark for the first time, with an intraday high of 44,185.73 points — setting a new record high and gaining over 1.2% at one point. However, the index subsequently retreated due to investor profit-taking pressure.

Optimistic expectations about Japan's political changes became the main driving force. “Investors are betting that the next leader from the ruling Liberal Democratic Party (LDP) could unleash a new wave of fiscal stimulus to bolster the economy,” XTB Investing’s senior market analyst Hani Abuagla wrote in a note.

While near-term volatility is expected to pick up amid political uncertainties, the upcoming change ultimately provides for a “greater longer-term policy and political stability, and a more conducive pro-growth environment for the equities market,” Julius Baer’s equity research analyst in Asia, Louis Chua, said.

Based on this, the firm expects the Nikkei 225 Index to continue its upward trajectory, potentially reaching 46,000 points within 12 months.

Additionally, improvement in trade prospects has also boosted market confidence. Last week, the U.S. and Japan successfully finalized a trade agreement, with the U.S. agreeing to significantly reduce tariffs on Japanese automobiles from 27.5% to 15%, and clarifying that this tax reduction will be implemented before September 16, eliminating the ambiguity surrounding the July trade agreement.

At the individual stock level, technology and automotive stocks led the gains, with semiconductor company Advantest rising 6.53% and NVIDIA key supplier Advantest seeing its share price climb nearly 7%. Major automakers such as Suzuki Motor and Mazda also recorded gains of nearly 2%.