Nikkei Reaches 33-Year High Amid Weak Yen and Positive US Developments

Japan’s Nikkei share average has reached its highest level since July 1990, driven by optimism surrounding a US debt ceiling deal and a weakening yen. The positive sentiment in the market is further fueled by the outperformance of Japanese chip-related companies, following a surge in Wall Street peers driven by excitement around artificial intelligence.

In the first 10 minutes of Monday’s trading, the Nikkei soared to 31,560.43. However, gains moderated, with the index standing at 31,325.84, up 1.32 percent, as it approached the midday break and neared the session low.

US President Joe Biden’s announcement of a budget agreement with House Speaker Kevin McCarthy on Sunday contributed to the positive atmosphere. While the deal faces criticism from hardline Republicans and progressive Democrats, market observers note a reduction in risks as both sides commit to avoiding a technical default.

Maki Sawada, a strategist at Nomura Securities, commented, “The Nikkei crossed the psychological 31,500 mark on Monday, but in the end, that level proved a bit too heavy. This week, I expect the Nikkei to steadily advance, but with short-term retracements to check its speed.”

The broader Topix also experienced gains, reaching as high as 2,175.13, although it did not approach last week’s 33-year high at 2,188.66. At the midday break, the Topix was up 0.96 percent at 2,166.41.

The Nikkei’s emphasis on exporter stocks allowed it to benefit more from the yen’s decline, approaching 141 per dollar for the first time in six months. A weaker currency enhances the value of overseas revenue. Notably, Honda Motor rose by 1.86 percent, and Subaru advanced by 1.78 percent.

Advantest, a chip-testing equipment maker with Nvidia Corp among its clients, emerged as one of Nikkei’s top performers. Although Advantest shares surged up to 6.9 percent to a record high, they entered the midday break up 4.18 percent, sharing the top performer spot with Nikon and startup investor SoftBank Group.

Out of Nikkei’s 225 components, 193 registered gains, 27 saw declines, and five remained unchanged.

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