The Nikkei 225 entered the ¥70,000 range in June and traded in the ¥65,000–¥68,000 range in August. The end of deflation and return to inflation may have brought Japanese stocks to the starting line of a new long-term uptrend.
In June 2026, the Nikkei 225 entered the ¥70,000 range and set a new all-time high. As of August, it was still trading in the ¥65,000–¥68,000 range, returning to levels that exceeded its record high at the end of 1989 for the first time in 34 years. This article views the move as occurring against the backdrop of the end of deflation and a normal return to inflation resulting from improving fundamentals at Japanese companies.
From a long-term perspective, Japan experienced a decline in its share of global GDP between 1990 and 2022. While the global economy continued to grow, Japan's annual growth rate remained at around 0.9%, and its share of the global economy contracted from 14% in 1990 to 4% in 2022. Against this backdrop, Japanese companies are said to be attracting renewed attention.
The prolonged period of deflation reduced Japan's ability to generate earnings, but the shift from deflation to inflation has brought Japanese companies to a stage where their ability to create value is being reassessed. The move has been identified as potentially marking the start of a new long-term uptrend in the Nikkei 225.
In conclusion, the view presented is that the Japanese stock market may be entering a new long-term uptrend, supported by a return to inflation and improvements in corporate fundamentals.