Nikkei breaks 35,000 level for first time since February 1990

The 225-issue Nikkei average reached its highest level since February 1990 on Thursday, with a weaker yen buoying exporters and caution over an impending hike by the Bank of Japan continuing to fade on the back of weak wage data.

The Nikkei was up 1.94% at 35,110.52 by the midday close. The index is on track for a third straight day of gains and closing in on its largest weekly rise since late March 2020.

The broader Topix was up 1.81% at 2488.65.

The strong earthquake that hit central Japan last week and weak wage growth data are forcing market participants to “reappraise” when the Bank of Japan will normalize its monetary policy, said Tony Sycamore, a market analyst at IG.

Workers’ real wages shrank for a 20th straight month in November, according to data published Wednesday, confounding officials’ wishes to see wage gains before tightening policy.

“That (wage data) gave the Nikkei the excuse to pop up there, towards that 35,000 level,” said Sycamore, adding the Nikkei “probably can continue to make good gains while we try and work out when the BOJ can look to take its next step.”

The yen fell 0.9% against the U.S. dollar overnight in the wake of the data and was hovering around ¥145.56 per dollar in the morning trade.

A weaker yen tends to support exporter shares, increasing the value of overseas profits in yen terms when firms repatriate them to Japan.

Japanese stocks also got a boost from a good day on Wall Street as megacaps rallied.

SMC’s 5.07% gain led the top performers, followed by Itochu at 4.83% and Hitachi at 4.58%.

The biggest losers were Yamato Holdings, down 2.78%, followed by Rakuten Group losing 2.58% and Shiseido down by 1.31%.

There were 202 gainers on the Nikkei index against 23 decliners.