The Nikkei 225 index continues its upward trajectory, reaching a new all-time high of 57,960 points today. The index has risen by around 15% since the beginning of the year, outperforming US, European, and Chinese equity markets, although it still lags South Korea’s KOSPI index, which has gained approximately 26% year to date. In addition, the TOPIX index also recorded a new record high at 3,864 points today, up about 13% since the start of the year.
This strong rally in Japanese equities can be attributed to several key factors. Most notably, the Liberal Democratic Party secured a landslide victory in the legislative elections held on February 8, under the leadership of Prime Minister Sanae Takaichi—an outcome that is relatively rare in Japan’s political history. This decisive win has given Takaichi broad room to maneuver and implement the policies she promised ahead of the elections, particularly expansionary fiscal policies aimed at boosting government spending, easing borrowing conditions, and cutting taxes, especially on food items, in an effort to revive the sluggish economy.
Japanese equity markets have also benefited from strong foreign investment inflows for six consecutive weeks, totaling more than ¥3.3 trillion, reflecting robust buying momentum from overseas investors.
In addition, the weakness of the Japanese yen has further supported equity markets. The yen fell to 157.66 per US dollar yesterday, its highest level since January 23, 2026, encouraging foreign investors to allocate more capital to Japanese assets.
From a technical perspective, indicators suggest that the Nikkei 225 could continue to rise. This outlook is supported by a clear upward trend in the 20-day, 50-day, and 200-day moving averages, with the 20-day moving average above the 50-day, and the 50-day above the 200-day. The Relative Strength Index (RSI) is currently at 73, indicating strong bullish momentum, while the MACD shows a bullish crossover between the MACD line and the signal line, further reinforcing the positive technical outlook for the Nikkei 225.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
