Japan's benchmark Nikkei 225 index rose nearly 3% on the first trading day of the year, once again approaching the 52,000-point mark after two months. Strong performance in the US stock market and positive earnings expectations for semiconductor-related companies appear to have boosted investor sentiment.
On May 5th, the Nikkei 225 index closed at 51,832 points, up 2.97% from the previous year's closing price. This is close to the all-time high of 52,411 points set on October 31, 2025. During the session, it briefly rose to 52,033 points, showing an upward trend. This marks the first time in approximately two months since November 4, 2025, that the index has touched the 52,000-point mark.
The core of this rally lies in the artificial intelligence and semiconductor industries. Shares of companies such as Kioxia, Advantest, SoftBank Group, and Tokyo Electron surged, leading the index higher. Analysts believe that the strength of semiconductor-related stocks on the New York Stock Exchange on the 2nd had a positive impact on the Japanese stock market.
Long-term interest rates also rose in tandem. On the same day, the yield on Japan's 10-year government bonds surged to 2.125% intraday, reaching its highest level in approximately 27 years since February 1999. Analysts pointed out that this was due to market observations that the Bank of Japan might raise interest rates to address concerns about the yen's depreciation and inflation. Furthermore, the upward trend in US Treasury yields at the end of the year and the beginning of the new year also influenced the Japanese interest rate market.
On the other hand, the yen exchange rate showed a downward trend in the foreign exchange market. As of 3:54 PM on the 5th, the yen-dollar exchange rate fluctuated within the range of 157 yen to the dollar, a significant depreciation compared to the previous day. This contrasts with the exchange rate falling below 157 yen in the previous two days. Market analysts believe that the possibility of interest rate hikes and expectations of economic recovery became factors driving the selling of yen.
Whether this trend can continue will largely depend on the Bank of Japan's monetary policy decisions and the US interest rate stance. Some forecasts suggest that if inflationary pressures persist and expectations of interest rate hikes in Japan materialize, capital inflows may strengthen, potentially allowing the Japanese stock market to maintain its strong performance in the medium to long term.
