Nikkei surges past 50,000 for first time

The Nikkei 225 Index jumped 2.4% to an intraday high of 50,491.23

Nikkei share average soared past the 50,000 level for the first time on Monday, continuing a run of successive records on expectations of sizeable spending from Japan’s new prime minister.

Crossing the key psychological threshold is the latest milestone for the blue-chip share gauge that has been red since fiscal dove Sanae Takaichi began her ascent to power.

The Nikkei 225 Index jumped 2.4% to an intraday high of 50,491.23. The index closed the morning session up 2.1% at 50,337.36, bringing its year-to-date gains to 26%.

The broader Topix also hit an all-time high, rising nearly 1.6% to 3,321.48 by the midday close. It has added 19.3% so far this year.

The Nikkei’s gains were supported by expectations for the Takaichi administration, whose policy is focused on growth, said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

The market kept buying stocks. Even as the Nikkei fell after Takaichi was elected, the decline did not last long because investors who were not able to catch up with the latest rally scooped up stocks on dip, said Ueno.

Chip-testing equipment maker Advantest climbed 5.15% to give the biggest boost to the Nikkei on Monday, while Uniqlo-brand owner Fast Retailing added 2.73%.

The gauge broke through 45,000 on September 16. It marks a dramatic turnaround for a long-moribund market that saw the Nikkei take 34 years to finally recover to its Bubble Economy high in February 2024.

The index rose to the brink of 50,000 last Tuesday, when Takaichi cleared a parliamentary vote to become premier. The Nikkei closed the week 3.6% higher as Takaichi pledged a proactive spending policy, with an economic stimulus package expected to exceed 13.9 trillion yen ($92.2 billion).

Fiscal packages tend to be welcomed by the market, irrespective of their actual impact on the overall economy, said Norihiro Yamaguchi, lead Japan economist at Oxford Economics.

The fact that Takaichi’s policy focus is on strategic investment and other market-friendly areas is another reason why the stock market reacted strongly.