The Nikkei 225 index, also known as the Tokyo Stock Exchange, rose above the psychological 20,000-point mark on Friday. The last time the index reached this level was 15 years ago in April 2000. In the early minutes of trading the Nikkei 225 reached 20,006.00 points, rising .34 per cent before retreating later in the day. The index has since moved into the red, and is about 80 points away from the important 20,000 threshold around 12pm Tokyo time. The Tokyo Stock Exchange initially rose following positive data from the US. The Dow Jones and S&P 500 were both up in the previous day of trading after a report showed that Americans filed less jobless claims than any other point in the last 15 years. The Japanese Yen also fell relative to the US dollar following the positive US data.
The Japanese economy has been on shaky ground as stimulus plans and monetary policies were widely seen as ineffective. An aging population, low birth rates, low wage growth and weak spending data have plagued Japan in the recent years. However, Fast Retailing recently raised its projections for yearly profits by 20 per cent. Strong domestic demand and international sales in companies such as the the popular Uniqlo brand are the primary contributors to the rise in profits. Nomura believes the share price of Uniqlo will rise 13.4 per cent in the next 12 months. As mixed data flows out of Japan, the Tokyo Stock Exchange continues its strong upward movement. “When we look back on this moment, the 20,000 figure should just be a stop along the road,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. “It wouldn’t be surprising if better-than-expected earnings lift the Nikkei to 21,000 or 22,000 by year’s end. However, above the 20,000 mark, we might begin to hear voices that stocks are a bit overvalued.”