Nikkei at 8,5 month high

Nikkei closed at 9.828 which is a 8,5 month high. The index has gained more than 13% in the last month alone.

The main reason for this performance seems to be the devaluation of the Yen vs the USD to the lowest level of the last 20 months. This is very positive for Japanese export companies and their stock prices followed suit.

Considering that the Bank of Japan (BOJ) has interevened in forex markets very often to devalue the Yen, I think they are currently really happy with the currency slide of the last months.

Other factors allowing for the Japanese market rally are the victory of Japan’s Liberal Democratic Party (LDP) in yesterday’s election, as well as the small Christmas rally of global stock markets in the last 3 weeks.

Next target for the Nikkei is clearly the 10.000 mark. I am interested to see if they get to 10.000 before the end of the year. The highest for 2012 has been 10.255 and this would be the second important target for the Japanese index in the next weeks.