The Nikkei index, which measures Japan’s stock market, climbed its highest level in three weeks today. This increase was mainly fuelled by a sharp rise in technology issues, as witnessed in most markets across the Wall Street.

Market sentiment was in a sweet spot because most of the leading semiconductor manufacturers in the United States released better than anticipated earnings results. The Nikkei 225 ended at 39,829.56, up 2.32%, while the Topix index rose 0.73% to 2,741. This brilliant performance may help to calm investors’ nerves and ease some of the recent fluctuations in the market.

The gains were led by heavyweight technology stocks; Tokyo Electron, a supplier to semiconductor firms, was 6.8% higher. Other big risers were Disco Corp up 6.8% and Advantest up by 4.9%. Further support to the positive spree in the tech sector was provided by increased in other related counters; Keyence was up 2.3% while Renesas Electronics by 2.8%.

Shares in many Japanese tech shares rose markers due to the Micron Technology’s after-hours share rising in its quarterly report. Such news had a spill-over effect on global semiconductor markets and increased investors’ expectations on the sector in the future.

Apart from information-telecommunication technology industry, all industry sub-adding indices in the Tokyo Stock Exchange Market appreciated. The shipping firms and insurance companies provided the better return which suggests that the investor sentiment is also improving in almost all sectors of the Japan’s economy. Positive market also driven by recent comments from the Bank of Japan (BOJ) on performance in the market.

In minutes of its last policy meeting, members noted that more caution had to be exercised with respect to upside risks to inflation but also cautioned about entrepreneurs building up too much hope for subsequent rate increases. This policy approach from the BOJ has supported equities as it has sustained a conducive environment and investors have confidence that monetary policy will remain friendly in near term.

The movement of yen also contributed to today’s market movement. First about currency, Japanese yen initially rose to 141.74 per dollar after the announcement of BOJ. But it soon broke the cycle and declined to 143.77 in afternoon Asian trading session. This currency movement added more positivity to the companies whose business mostly relied on exporting their products to foreign markets since a weak yen would accord overseas earnings better returns when converted into the home currency.

They included, among others, the blue-chip exporters which are some of the day’s best performers. In the automotive industry Toyota Motor Corp and Honda Motor Co’s established strong growth, due to the consideration of the beneficial exchange rate and the general uplifting market mood. The strong performance of these car makers signifies the general well being of the Japanese export-oriented economy.

Market forecasters are therefore in an optimistic mood but with restrained enthusiasm when looking at the future of Japanese equities. Even though the latest rally is most welcoming today, some economist believe that global economic shocks and geopolitical risks might prevail in the upcoming months.

However, high earnings quality and attracted P/E ratios related to global peers as well as reasonable valuations for many Japanese firms make Japan an attractive destination for foreign investors. Meanwhile as the trading day ended in the markets, actors were already looking forward to more release of economic indicators and decisions by policy makers at the domestic and global level.

These events may well prove decisive in terms of defining the short-term path of Japanese equities. For the time being, though, shareholders have cause to celebrate today’s rising stock prices and feel confident once more in Japan’s equity markets.