Japan’s Nikkei index surpasses the 36,000 mark due to a rally in shipping stocks, hitting a 34-year high

On Monday, Japan’s Nikkei stock average exceeded the 36,000 mark for the first time in 34 years, helped by shippers and financial institutions due to falling U.S. bond yields and stabilization of the yen exchange rate.

The Nikkei index ended the day up nearly 1% at 35,901.73, following its highest reading of 36,008.23 since February 1990.

Value stocks outperformed growth stocks last week, when the Nikkei index recorded its best performance in 22 months.

The Topix index, which has less weight on technology stocks than the Nikkei, rose 1.22% on this day and hit its highest intraday high in 34 years.

The Topix Value Share sub-index rose 1.55%, outpacing the Growth Share sub-index’s 0.88% gain.

The Tokyo Stock Exchange (TSE) shipping index surged 5.3% as freight rates rose due to geopolitical risks, leading the rise among 33 industries.

Financial stock prices, which had fallen sharply on Friday, rebounded strongly. The TSE securities index rose 4.56%, and the banking industry index rose 2.19%. Despite signs of overheating, Japanese stocks continued to rise. One technical indicator called the Relative Strength Index (RSI) saw the Nikkei rise to 76.41, with readings above 70 indicating “overbought” conditions.

“The Nikkei is showing surprising strength,” said Kamitani, a strategist at Nomura Securities, adding that there is likely to be some form of correction in the pace of the rally this week.

Providing another tailwind after trading closes on Monday, the TSE will begin publishing a monthly list of companies that have disclosed plans to increase capital efficiency.

The TSE’s corporate governance plan is “generating a lot of interest,” said Daniel Hurley, emerging markets and Japanese equity portfolio specialist at T. Rowe Price.

“This is why foreign investors, activist investors, hedge funds, Warren Buffett and Berkshire Hathaway are paying attention to Japan today.”