Nikkei 225 Index, driven by semiconductor positive news, approaches 52,000 points after two months... The all-time high is within reach.

The Japanese representative stock index, the Nikkei 225, rose nearly 3% on the first trading day of this year, approaching the 52,000 mark for the first time in two months. The strong performance of the US stock market and positive earnings expectations for semiconductor-related companies seem to have boosted investor sentiment.

On the 5th, the Tokyo Stock Exchange’s Nikkei 225 index closed at 51,832 points, up 2.97% from last year’s closing price. This is close to the all-time high of 52,411 points set on October 31, 2025, with an intraday high of 52,033 points, showing an upward trend. This is the first time since November 4, 2025, that the index has touched the 52,000 level again after about two months.

The core of this rally lies in artificial intelligence and the semiconductor industry. Stocks of related companies such as Kioxia, Edwan Testing, SoftBank Group, and Tokyo Electron surged significantly, leading the index higher. Analysts believe that the strength of semiconductor stocks in the New York stock market on the 2nd had a positive impact on the Japanese stock market.

Long-term interest rates also rose in tandem. On that day, the yield on Japan’s 10-year government bonds soared to 2.125% intraday, reaching the highest level in about 27 years since February 1999. Analysts point out that the background includes market expectations that the Bank of Japan may raise interest rates to counteract yen depreciation and inflation concerns. Additionally, the rising trend of US Treasury yields at the end of the year and beginning of the new year also influenced Japan’s interest rate market.

On the other hand, the foreign exchange market showed a declining trend in the yen exchange rate. As of 3:54 PM on the 5th, the yen/USD exchange rate fluctuated around 157 yen per dollar, showing a significant depreciation of the yen compared to the previous day. This contrasts with the previous two days when the exchange rate fell below 157 yen. Market interpretations suggest that the possibility of rate hikes and expectations of economic recovery have become factors for selling yen.

Whether this trend can continue in the future largely depends on the Bank of Japan’s monetary policy decisions and the US interest rate outlook. Some forecasts indicate that if inflationary pressures persist and Japan’s domestic rate hike expectations materialize, capital inflows could strengthen, and the Japanese stock market may maintain a long-term strong trend.