Will Nikkei 225 surpass 24,000?

NIKKEI experienced a strong downside between late February and early March 2020 when the whole world was affected by the Covid-19 pandemic. The steep increase in cases from end March to April has caused the Japanese government to close off its border to international arrivals. Soon after, the Japanese government locked down the nation by declaring a state of emergency. The lockdown saw the economy come to a standstill and resulted in the GDP of Japan contracting by 2.2 per cent in the first quarter this year.

Though economic activity has plunged, the Nikkei Index rose after a strong sell-down in end March. Nikkei beat all estimates and displayed a V-shaped recovery despite selling pressures echoed by the market.

There are two main factors which have contribute to the rise of the Nikkei 225 Index. Firstly, quantitative easing measures by the Bank of Japan continues to fuel the depression in yields and depreciation of the yen, both of which make Japan equities seem more attractive in terms of prices.