Nikkei Surges to Record High Amid Fed Cut Hopes and Cheaper Borrowing Costs

The Nikkei stock market index in Japan has risen to a record high as investors bet on a potential US Federal Reserve rate cut and cheaper global borrowing rates. This optimism has driven up stocks such as SoftBank, which has surged on bets related to artificial intelligence and cloud growth. The Japanese market has been fueled by hopes of a rate cut, as well as a decline in US jobless claims, which has boosted investor sentiment.

The Nikkei 225 stock market index in Japan has reached a record high, fueled by investor optimism surrounding potential U.S. Federal Reserve rate cuts and cheaper global borrowing rates. The surge in the Nikkei index, which hit 44,251.65, was driven by a 9% surge in SoftBank's stock price, propelled by optimism in the artificial intelligence and cloud computing sectors SoftBank's AI Surge Propels Nikkei to Historic Heights ...^[1].

SoftBank's stock performance was bolstered by expectations of significant growth in AI and cloud services, with investors anticipating increased demand for GPU-based cloud services. Oracle, a major player in cloud infrastructure, projected its cloud infrastructure revenue to surge to $114 billion by fiscal 2030, triggering strong gains across AI-related stocks. Oracle's shares soared by 36%, while other tech stocks such as Nvidia and Broadcom also experienced significant gains, climbing 4% and 10% respectively Artificial Intelligence Stocks Rally as Nvidia, TSMC Gain on Oracle Growth Forecast^[2].

The Japanese market's optimism is also driven by expectations of a Federal Reserve rate cut, as evidenced by a recent U.S. Labor Department report indicating a rise in the unemployment rate. This report has fueled speculation that the Fed might cut interest rates to support the cooling U.S. labor market. Japanese investors have significantly increased their net investments in foreign stocks, reaching a four-month high, with expectations of a rate cut in September Japanese investment in foreign stocks hit 4-month high as Fed cut bets mount^[3].

The record high in the Nikkei index reflects a broader trend of investor confidence in the global economy, driven by hopes of lower interest rates and increased demand for technology services. However, the market remains cautious, with mixed sentiment noted by Daiwa's Tsuboi, who cited weak banking stocks as a sign of lagging economic confidence SoftBank's AI Surge Propels Nikkei to Historic Heights ...^[1].