Japan's Long Comeback

The second-largest stock market has captured the interest of investors, supported by stronger, more broad-based earnings, and incentivized by Japan's fiscal and monetary policies.

Stocks around the world hit new all-time highs last week, but one stood out.

  • The U.S. S&P 500 Index eclipsed the high set just the week before.
  • Europe's STOXX 600 Index climbed above its prior high set a little over two years ago in January 2022.
  • Japan's Nikkei 225 Index hit a new all-time high set 34 years ago.

We have been eagerly anticipating this move by Japan's stocks market, highlighted last June in Japan: Reclaiming Lost Decades. Today, the Nikkei 225 Index continues to outperform the S&P 500. Even though Japan's stock market is the second largest in the world, it often doesn't get much attention; the Nikkei 225 Index peaked in 1989 and had not hit a new all-time high until now. Japan's stocks are up 17% this year (the slide in the yen relative to the dollar this year reduced that gain to 10% when measured in US dollars), making it the best-performing market in the world in 2024 in either currency.

Japan's stock market climbs above prior high set in December 1989