The NY Dow is reported to have reached a new record high, prompting discussion of the possibility of the Nikkei Average surpassing ¥100,000 in light of constituent changes and market expectations.
The NY Dow is reported to have reached a new record high, with multiple factors said to be at work, including bullish sentiment in the equity market and the impact of constituent changes. By comparing these developments with trends in crude oil and copper prices in the commodities markets, the analysis raises questions about the relationship between sharp gains in equity indices and real-economy indicators.
The author points out that equity indices are designed to maintain expectations for economic growth through changes in their constituents over time, and therefore have an aspect that functions as a form of built-in uplift. Figure 2 shows the changes in the number of NY Dow constituents by sector in 1975 and 2025, and explains that the weightings of information technology, financials and healthcare have increased, while the weighting of materials has declined.
The analysis suggests that this structural change could help support long-term gains in share prices, and presents the view that the Nikkei Average may be capable of reaching beyond ¥100,000. It summarizes the argument that changes in index constituents alter the nature of the index, making it easier to incorporate changes in economic growth.