Nikkei 225 Hits Record High, Surging Over 2,000 Points This Week; Will the Japanese Stock Market’s ‘Golden Age’ Continue in 2026?

Tradingkey - At this Friday's close, the Nikkei 225 Index (Nikkei 225) rose slightly by 0.36% to close at 58,850 points, hitting a new all-time high. Over the full week, the index gained 3.56% cumulatively, an increase of over 2,000 points in a single week. More striking is its performance year-to-date; in just two months, the gain has reached 16.91%, extending the explosive bull market of 2025.

The Nikkei 225's advance this week was driven by multiple factors, with the dovish shift in Japanese monetary policy serving as the core catalyst.

This week, the Japanese government nominated two "reflationist" scholars to the Bank of Japan Policy Board; they support low interest rates, yen depreciation, and further economic stimulus measures, which eased market concerns regarding further interest rate hikes.

In addition, Japanese Prime Minister Sanae Takaichi pledged to implement fiscal expansion and tax cuts. The loose monetary and fiscal environment released more liquidity into the stock market, providing strong support for the index's climb.

Regarding the performance of key heavyweights, tech giant SoftBank Group rose by over 4% at one point this week, buoyed by the positive sentiment from Nvidia's strong earnings and the growth prospects of the AI industry. Sony Group's stock price surged 7.2% after expanding its share buyback program from 150 billion yen to 250 billion yen, highlighting market recognition of its corporate value enhancement measures.

Chip-related stocks underperformed the broader market; Nvidia supplier Advantest fell 4.5% this Friday, DISCO performed strongly early in the week, but the correction toward the weekend was severe, with the stock closing down about 4.5% on Friday and recording a 1.2% decline on Thursday. DISCO's valuation had previously been at historical highs. As expectations for Bank of Japan rate hikes intensified, such high-P/E growth stocks were the first to face valuation correction pressure.

Notably, the Nikkei 225 Index has gained more than 53% over the past 12 months, with a 10.37% rise in February alone, demonstrating strong momentum. However, investors should remain cautious; the index's continuous streak of record highs has accumulated profit-taking pressure, and volatility in global tech stocks along with changes in Japanese monetary policy expectations could trigger short-term corrections.