Japan's Nikkei index rises 0.7% to 42,890.85 at morning close

Japan's Nikkei index rises 0.7% to 42,890.85 at morning close

The Nikkei index, a benchmark for the Japanese stock market, closed at 42,890.85 on September 2, 2025, marking a 0.7% increase from the previous day's close. This upward movement reflects a positive market sentiment, driven by several key factors.

Analyzing the data from SimplyWall.st [1], the Japanese market's valuation has shown fluctuations over the past few years. The market capitalization has ranged from JP¥722.6t in March 2023 to JP¥1050.8t in September 2025, indicating a steady increase. The earnings and revenue growth rates for Japanese listed companies have been 9.4% and 5.9% respectively over the last three years, contributing to the overall market growth.

The current market valuation, as of September 2025, stands at a Price to Earnings (PE) ratio of 17.6x, which is higher than its 3-year average of 15.7x. This suggests that investors are optimistic about the long-term growth prospects of the Japanese market. The higher PE ratio indicates that investors are willing to pay more for each unit of earnings, reflecting their confidence in the market's future performance.

The Japanese market's performance is further supported by its robust earnings and revenue growth rates. The earnings growth of 9.4% per year and revenue growth of 5.9% per year demonstrate the resilience and profitability of Japanese companies. This growth is a positive indicator for investors, as it suggests that companies are generating more sales and profits, which can lead to increased shareholder value.

In conclusion, the recent rise in the Nikkei index is a reflection of positive market sentiment driven by robust earnings and revenue growth, as well as investor confidence in the long-term growth prospects of the Japanese market. The higher PE ratio indicates that investors are willing to pay more for each unit of earnings, reflecting their optimism about the market's future performance.

References:
[1] https://simplywall.st/markets/jp