The Nikkei 225 passed 30,000 on Monday, the first time in over three decades that Japan’s blue-chip stock market index crossed that threshold. The long-awaited event was spurred by a series of positive news reports, and most analysts believe that more gains are in the offing.
But we should not kid ourselves: The market rebound is bound to fade as structural issues reassert themselves. A strong stock market is good for Japan, but more important is the health of the overall economy. That remains in doubt.
The Nikkei has had a good run. It has risen nearly 30% since November, almost 9% since the beginning of the year and climbed more than 1,800 points, or close to 7% in the last two weeks. It is outperforming other markets in North America and Europe: The U.S.-based Dow Jones Industrial Average has registered only one-third of the Nikkei’s rise. Nor is the Nikkei alone: The Topix, which reflects a broader set of companies in Japan, also recorded a three-decade high this week.