Tokyo’s Nikkei 225 index shattered its historical record on Thursday, closing at 41,087.75 as Asian markets rode a wave of bullish sentiment from Wall Street’s earnings-driven rally and tentative progress in U.S.-Iran nuclear negotiations. The 1.4% gain marked the Nikkei’s first breach of the 41,000 threshold, eclipsing its 1989 bubble-era peak.
Analysts attributed the surge to three converging factors: stronger-than-expected Q2 results from U.S. tech giants, yen weakness boosting export stocks, and reduced Middle East tensions after diplomatic sources confirmed indirect Washington-Tehran talks. ‘This is fundamentally different from the 1989 bubble,’ said SMBC Nikko strategist Masao Muraki. ‘Current valuations are supported by corporate governance reforms and a weak currency policy.’
Seoul’s Kospi mirrored the momentum with a 2.1% jump, led by semiconductor stocks after NVIDIA’s earnings beat. The regional rally followed Wednesday’s 0.6% S&P 500 gain, though some traders cautioned about overextension. ‘We’re seeing classic FOMO behavior,’ warned CLSA equity strategist Takeo Kamai, noting the Nikkei’s 14-day RSI had entered overbought territory at 72.3.
Market participants now await Friday’s U.S. PCE inflation data, which could influence Federal Reserve rate expectations. The BOJ’s looming July policy meeting also weighs on sentiment, with 43% of economists surveyed by Bloomberg anticipating further yield curve control adjustments.