Dow hits new record, Nikkei at 26-year high
Tokyo: Japan’s Nikkei index jumped to a near 26-year-high on Tuesday, as foreign investors piled in on expectations of strong earnings from Japan Inc., while Wall Street’s strength underpinned sentiment.
The Nikkei share average opened lower but later soared and closed 1.7% higher at 22,937.60, the highest closing level since January 1992.
US stocks climbed to record highs overnight, helped by earnings optimism and merger activity.
The Dow hit a record high at the open on Tuesday while the S&P and the Nasdaq were hovering near record levels, as earnings season winds down and investor expectations shift to a much-awaited cut in corporate taxes. The Dow Jones Industrial Average rose 19.08 points, or 0.08%, to 23,567.5. The S&P 500 gained 1.33 points, or 0.05%, to 2,592.46. The Nasdaq Composite dropped 0.72 points, or 0.01%, to 6,785.72.
Takashi Ito, equity market strategist at Nomura Securities, said that Japanese stocks are currently trading at 14-times their projected earnings, compared with a much more aggressive valuation of 37.73-times their projected earnings in 1992. “We tend to compare the current market’s strength with that of 1992. But the current rally in Japanese stocks is fuelled by real profits and that’s different from 26 years ago when companies struggled to be profitable after the real estate bubble burst,” said Ito. Reuters