Nikkei 225 Hits Record High as AI Stocks Surge

Key Takeaways

• The Nikkei 225 closed above 60,000 for the first time, marking a major milestone for Japanese equities.
• AI, semiconductor, robotics and automation stocks led the rally.
• Strong earnings from Keyence and Fanuc helped lift market sentiment.
• The rally remained narrow, with gains concentrated in major index heavyweights.
• BOJ policy, oil prices and Middle East tensions remain key risks for traders.

Japan’s Nikkei 225 crossed a major milestone, closing above 60,000 for the first time as AI, semiconductor, robotics and factory automation stocks led the rally. The benchmark rose 1.38% to 60,537.36, while the broader Topix climbed 0.5% to 3,735.28.

The move extends a strong year for Japanese equities, with the Nikkei now up 18.6% so far this year. Wall Street’s record highs helped lift sentiment, while strength in global semiconductor shares added momentum to Japan’s AI-linked trade.

AI and automation stocks drive the rally

Japanese technology and automation names were the main drivers. Keyence and Fanuc jumped nearly 16% after both companies reported better-than-expected profit. SMC also gained 7.1% after reports said activist fund Palliser Capital had made a sizeable investment in the company.

The rally shows how strongly traders are still pricing Japan’s role in AI supply chains, robotics, chips and factory automation. However, the move was not broad-based. The Nikkei had 94 advancers against 130 decliners, showing that gains were concentrated in a smaller group of heavyweights.

Hormuz relief supports risk appetite

The Nikkei briefly slipped after the open, but recovered after reports said Iran had submitted a new proposal to the US to end the war and reopen the Strait of Hormuz.

That helped risk appetite because Hormuz remains central to the inflation trade. If shipping risk eases, oil pressure may cool and Japanese manufacturers could face less pressure from energy and logistics costs. Still, the risk has not disappeared, especially with Japan’s economy exposed to imported energy prices.

BOJ policy remains a key risk

The Bank of Japan is expected to hold rates at its April 27 to 28 meeting, with the current policy rate at 0.75%. Markets have largely priced out an April hike, but traders are still watching for signs of a possible move as early as June.

A patient BOJ could support equities by keeping liquidity conditions easier for longer. However, a weaker yen and higher oil prices could raise import costs and pressure corporate margins.

Nikkei 225 tests higher resistance

From a technical view, Nikkei225 is trading near 60,259, holding above key moving averages. The 5-day average at 59,548 and 10-day average at 59,324 now act as near-term support, while the 20-day average at 57,151 reinforces the broader uptrend.

Explore the key drivers behind Japan’s latest stock market breakout in this article.