Tokyo: Japan’s Nikkei share average reached a 34-year high, propelled by a surge in chip shares, mirroring Wall Street’s ascent to a new record. The index briefly touched 36,877.41, a level unseen since February 1990, and closed 0.7% higher at 36,803.41. Semiconductor stocks, including Lasertec and Screen Holdings, outperformed, while Tokyo Electron and Advantest also registered gains.

Investors eagerly awaited the Bank of Japan’s monetary policy decision, with expectations of no change to stimulus but keen interest in hints about exiting negative interest rates. The broader Topix index also marked a multi-decade high. The U.S. S&P 500’s consecutive record highs, especially in tech stocks, contributed to the positive sentiment. Analysts noted the influence of a retreat in bond yields and emphasized the need for the BOJ meeting outcome before proactive market moves.

The previous session saw the Nikkei reaching another 34-year peak, closing 1.62% higher at 36,546.95. The rally was broad-based, with 207 of the index’s 225 components advancing, driven by the U.S. S&P 500’s record-high close. SoftBank Group and chip-testing equipment maker Advantest posted gains. Concerns about market overheating persisted, with technical indicators signalling potential pullback risks. The Nikkei’s 9.2% year-to-date advance surpassed its global counterparts.

Despite the potential for a pullback, analysts suggested that the uptrend remains intact, and a test of 37,000 is likely in the coming weeks. The market’s focus on U.S. benchmarks, rather than the dollar-yen rate, and the anticipation of a positive outcome from a potentially hawkish BOJ shift contributed to the Nikkei’s resilience. Investors see confidence in Japan avoiding deflation, even with possible changes in the central bank’s policies.

In summary, Japan’s stock market is riding high on global tech trends, reaching multi-decade highs, with a cautious eye on central bank decisions and potential indicators of market correction.