Photo/Illutration An electronic stock board in Tokyo shows the Nikkei 225 index hitting 40,000 for the first time in history on March 4. (Hikaru Uchida)

The Nikkei 225 index soared into uncharted territory on March 4, closing at 40,109.23, marking the first time in history that the closing price exceeded 40,000.

The benchmark index rose for the second consecutive business day, closing up 198.41 (0.5 percent) from the closing price on March 1. 

The Nikkei index reached a new high for the second consecutive business day due to expectations for improved performance of Japanese companies.

On Feb. 22, the Nikkei index hit its highest closing price, 38,915, in about 34 years, which was reached at the height of the bubble economy. Since then, the bull market has not lost momentum.

Semiconductor-related stocks are continuing to push the market higher.

Economic indicators released in the United States on March 1 were weaker than market expectations, raising expectations for an early interest rate cut.

High-tech stocks were bought as a tailwind of lower interest rates, and semiconductor stocks such as Nvidia and Intel led the market.

The Nasdaq Composite Index, which is dominated by high-tech stocks, hit an all-time high for the second consecutive day.

On the Tokyo market on March 4, semiconductor-related stocks such as Tokyo Electron and Advantest Corp. also rose across the board.

The yen continued to weaken at around 150 yen per dollar on the foreign exchange market in Tokyo on March 4, which also boosted stock prices.

On March 1, Bank of Japan Governor Kazuo Ueda reiterated his stance that the BOJ would carefully assess the timing of a shift from large-scale monetary easing, and this is believed to have weakened the view of an early shift.

The Nikkei 225 has surged nearly 7,000 in the first two months of the year.

An analyst points out that the market may be overheated, saying, “The speed of the rise will likely spread a sense of caution and the upside is likely to be heavy.”

Chief Cabinet Secretary Yoshimasa Hayashi said at a news conference on March 4 that he was “very encouraged” by the 40,000 mark being hit for the first time.

He said it was a “positive evaluation” of the Kishida administration’s efforts. He emphasized that the administration’s goal of raising wages to outpace price hikes will also be linked.

Despite strong stock prices, the public does not feel a real sense of economic recovery due to the prolonged high cost of living.

Hayashi said that in the exchange of opinions between the prime minister and the business community in January, Kishida strongly called on the business community to raise wages to a level higher than last year.

Currently, there is a growing movement in response to Kishida’s call during the spring “shunto” labor negotiations, Hayashi said. 

Hayashi said, “We will work to realize wage increases that exceed price increases, including those at small, midsize and large businesses, so that the people’s sense of well-being will improve.”

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