Japanese Stock Market and Nikkei 225 Outlook for 2024

The Japanese stock market has demonstrated a remarkable resurgence, with the Nikkei 225 index experiencing significant growth and attracting substantial foreign investment. This report delves into the current state of the Japanese stock market and provides a comprehensive analysis of the outlook for the Nikkei 225 index in 2024, supported by data and forecasts from various sources.

Current State of the Japanese Stock Market

As of the latter part of 2023, the Japanese stock market has been on an upward trajectory. The Nikkei 225 index rose by 1.5 percent on a given Wednesday to 33,502, marking a new high for the year. This performance is notably ahead of other major indices such as the S&P 500, indicating a renewed investor confidence in the Japanese equities market. This optimism is further bolstered by a reported 10 weeks of consecutive net foreign buying in cash and futures, amounting to a total of 7.9 trillion yen.

Contributing factors to this growth include Japan’s improving economic fortunes and the perception that Japanese companies are becoming more attractive investment opportunities. Foreign investors bought $15.6 billion worth of Japanese stocks in a recent month, the highest monthly amount since October, signaling strong international interest.

Nikkei 225 Outlook for 2024

Looking ahead to 2024, the Nikkei 225 index is forecasted to continue its positive momentum. Longforecast.com predicts that the Nikkei 225 will start early March 2024 at 33,756, with a potential maximum value of 35,829 and a minimum value of 31,141. The average for the month is projected at 33,553, with the index expected to end at 33,485, reflecting a slight decrease of 0.8% for March.

Moreover, Japan’s real GDP growth is forecasted to expand by 1.5% in 2024, outperforming the consensus of economist forecasts surveyed by Bloomberg, which stands at 1%. This economic outlook, coupled with pent-up demand in both business investment and consumer demand, particularly for services, provides a supportive backdrop for the stock market.

A Reuters poll of 10 stock strategists suggests a median forecast for the Nikkei’s level in mid-2024 at 35,000, with estimates ranging from 31,143 to 39,500. This forecast is underpinned by expectations of an earnings boost driving the index to new heights.

The most bullish forecasts even suggest that the Nikkei could reach 39,500 in June and 40,900 by the end of 2024, potentially marking a three-decade high. Such optimism reflects a broader consensus among analysts, who are finding it increasingly difficult to maintain a bearish stance on the Japanese stock market as it continues to outperform expectations.

Conclusion

In conclusion, the Japanese stock market appears to be experiencing a period of significant growth and investor interest, which is expected to carry into 2024. The Nikkei 225 index is forecasted to sustain its upward trend, with various sources predicting levels ranging from 35,000 to over 40,000 by the end of 2024. Factors contributing to this positive outlook include Japan’s projected economic growth, foreign investment influx, and anticipated corporate earnings improvements. Based on the provided data and trends, it is reasonable to anticipate that the Japanese stock market, particularly the Nikkei 225 index, will have a transformational year in 2024.

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