Japan's Nikkei tops 43,000 for first time ever

Japan’s Nikkei share average breached the 43,000-mark for the first time on Wednesday (Aug 13), with the broader Topix index also scaling a fresh all-time peak, tracking Wall Street’s overnight gains and extending the rally to a sixth straight session.

The Nikkei gained as much as 1.7 per cent to touch an unprecedented 43,451.46 before ending the day at a record-high closing level of 43,274.67.

That took its winning run to 7.4 per cent since August 4. Monday of this week was a national holiday in Japan.

The broader Topix advanced as much as 1.2 per cent to a record 3,103.31 points, before finishing at 3,091.91 – also booking a sixth-straight session of gains.

Overnight, the S&P 500 and Nasdaq ended at record highs as a moderate reading of July inflation bolstered bets for a Federal Reserve interest rate cut next month.

“A sense of relief is permeating through markets” following the US Consumer Price Index (CPI) data, leading Japanese stocks “to take a step higher,” said Maki Sawada, an equities strategist at Nomura Securities.

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At the same time, “there are signs that the Nikkei is overheated after its extremely steep rally, and a steep drop at any time wouldn’t come as any surprise,” she added.

The Nikkei’s relative strength index (RSI) rose above 75, well beyond the 70 line that many analysts consider indicative of an overheated market. The RSI was at a similar level on July 24, and the Nikkei fell in the following four sessions.

Of the Nikkei’s 225 components, 151 rose versus 74 that fell.

Tech shares stood out, with chipmaker Renesas Electronics jumping almost 7 per cent, chip-testing equipment maker Advantest rising 5.4 per cent and Sony Group gaining 3.5 per cent.

A strong earnings season continued to power big advances for some stocks, with tyre maker Yokohama Rubber vaulting 8.3 per cent to be the Nikkei’s biggest percentage gainer.

Athletic apparel company Asics soared nearly 18 per cent after its favourable financial results to be the best-performing Topix stock. REUTERS