Japan's stock market witnessed a historic rally as the Nikkei share average reached unprecedented heights, driven by strong performances in the technology sector and a weakening yen.

Record-Breaking Performance

The Nikkei share average closed at an all-time high of 52,411.34, marking a significant 2.1% increase. This surge contributed to an impressive 16.6% gain for October, the largest monthly increase since January 1994. The broader Topix index also hit record levels, closing at 3,331.83 with a 0.9% gain.

Tech Sector Leads the Charge

The rally was primarily fueled by technology stocks, following robust sales forecasts from global tech giants Amazon and Apple.

• Amazon reported its fastest cloud revenue growth in nearly three years
• Apple's CEO Tim Cook provided holiday-quarter forecasts exceeding Wall Street expectations

Japanese chip companies were at the forefront of this upward trend:

Currency Impact

A weaker yen, which slid to record lows against the euro and multi-month lows against the dollar, provided additional support to heavyweight exporters. This currency movement came after the Bank of Japan held rates steady, maintaining its accommodative monetary policy.

Market Outlook

MUFG Asset Management suggests the market has room for another 10% rise. This optimistic outlook is driven by two key factors:

1. Global AI momentum
2. Domestic fiscal stimulus hopes under new Prime Minister Sanae Takaichi

As the Japanese market continues to break records, investors will be closely watching how these factors play out in the coming months.

Japan's stock market experienced a notable downturn as investors locked in profits following recent gains. The Nikkei share average fell 1.35% to close at 48,641.61, marking its second consecutive session of losses.

Market Overview

The broader Topix index also declined, dropping 0.39% to 3,253.78. This pullback comes after the Nikkei reached a record intraday high of 49,945.95 recently.

Sector Performance

Technology Sector Hit

The technology sector led the decline, with several key players experiencing significant drops:

The downturn in tech stocks was further exacerbated by reports of potential U.S. export restrictions to China involving American software.

Defense Sector Surge

In contrast to the overall market trend, defense-related shares saw substantial gains:

These gains are attributed to expectations of increased defense spending.

Market Outlook

While the market has taken a step back, the mixed sector performance suggests that investors are recalibrating their positions in light of recent developments. Market participants will continue to assess various factors that may influence trade, defense, and economic cooperation in Japan.