Japanese stock market breaks 50,000 intraday for the first time

Buoyed by the administration's stable approval ratings

The Japanese stock market, buoyed by hopes of easing US-China trade tensions and the Sanae Takaichi administration's stable approval ratings, surpassed the 50,000 intraday level for the first time in history.

The Japanese market's representative index, the Nikkei 225 average (hereafter the Nikkei average), rose strongly at the market open on the 27th, jumping more than 1.7% (839 yen) from the previous trading day intraday to surge as high as 50,138.96 yen.

High consecutive poll approval ratings for the Takaichi Cabinet, and the fact that in trade negotiations between the US and Chinese governments the US moved toward withholding the imposition of 100% tariffs on China, were positive factors.

In a poll released that day by the Nihon Keizai Shimbun, the Takaichi Cabinet's approval rating reached 74%. The approval rating announced by the Asahi Shimbun was also high at 68%. In particular, people in their 30s and younger and the working-age generation showed higher approval ratings due to expectations for policies. The market views these high approval ratings as likely to increase policy implementation capacity, which lifted stock prices. Signs of an easing in the US-China trade war also created expectations that would reduce global economic uncertainty, leading to stock price gains.

In addition, the US consumer price index (CPI) released the previous week came in below market expectations, supporting expectations of interest-rate cuts by the US Federal Reserve (Fed), which also supported the stock price rise.

According to the Nihon Keizai Shimbun, the Nikkei average first reaching the 40,000 range intraday occurred in March 2024, meaning it has once again crossed a major milestone after a year and a half.

Hideyuki Ishiguro, chief strategist at Nomura Asset Management, said, "Compared with the US stock market, the Japanese market is still undervalued," adding, "Considering corporate earnings growth next quarter, 50,000 yen appears to be a passing point."

Jang Ji-min, guest reporter, Hankyung.com newsinfo@hankyung.com