The Japanese stock market has continued to grow, rising to 72,500 points, a record high. This level not only updates the record, but also increases significantly above the highs of 1989, indicating that changes in exchange rates and energy prices are supporting the Japanese stock.
Weak Japanese yen-led export unit
One of the important contexts in which the current round rose was that the yen remained low to the dollar for decades. Weakening of the yen is usually in the interest of exporting enterprises, as Japanese goods are more price-oriented in overseas markets and their income will improve when they are converted to their home currency.
For the manufacturing sector and the Japanese stock market, which has a higher export weight, exchange rate changes have a direct impact on profitability expectations, which is also an important reason for the continued flow of funds to the relevant sectors.
The fall in oil prices reduces cost pressures
The fall in international oil prices has also improved market judgement of the Japanese economy. As Japan is highly dependent on energy imports, the fall in oil prices has helped to lower import costs and ease inflationary pressure from inputs.
With a reduced energy burden, it is expected that the cost-side pressure on enterprises will decline and that the overall economic environment will be more conducive to maintaining a strong stock market.
Central Bank of Japan and financial focus
After high index innovation, the market then focuses on two factors: Whether the Central Bank of Japan maintains its current policy position and whether business profits continue to support valuation.
- The mantra rises to 72,500 points
- Before 1989, about 38,900 points
- Japanese yen and oil prices remain key drivers