Early 2024 marked an unprecedented achievement for Japan's stock market, a key indicator of Asia's economic vitality. The Nikkei 225 Index, which reflects the performance of 225 major companies on the Tokyo Stock Exchange, hit new record highs, concluding the week with an impressive 5.63% increase at 40,888.43 – showing a 22.19% surge since the start of the year, after momentarily surpassing the 41,000 mark on Friday. This feat followed closely after the Federal Reserve's announcement to retain its interest rate projections. Additionally, Japan's equity market received a boost from the Bank of Japan's accommodative stance, despite witnessing a February inflation rate leap to 2.8% from 2.2%.

Boost from the Fed and Bank of Japan Spurs Record Highs

The trading week wrapped with Japanese stocks touching new heights, spurred by the Federal Reserve's decision to maintain interest rates in the 5.25% to 5.5% range. The Federal Reserve's "dot plot," indicating potential interest rate cuts by Federal Open Market Committee officials in 2024, played a crucial role in reassuring investors. Additionally, the Bank of Japan edged up interest rates slightly between 0.0% and 0.1%, stepping away from its negative interest rate policy. Nevertheless, Governor Kazuo Ueda's commitment to an easing monetary policy pushed the Japanese yen to year lows.

Japan's Stock Market Outshines Global Competitors

Japan's stock market achievements over the past 18 months are nothing short of historical, as it outperforms even the S&P 500 to become the leading developed equity market.

This remarkable growth not only highlights the Japanese market's resilience but also the effective management of its monetary and fiscal policies. Japanese ETFs reflect this upward trend, with a 4.52% weekly increase and a 17.08% rise year-to-date. For instance, the CI WisdomTree Japan Equity Index ETF (JAPN.B) saw a 4.81% upswing last week.

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Funds Specific Data: JAPN.B, ZJPN, CJP, FLJA

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.