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Japan’s Nikkei index hit a 4-and-a-half-year high today after jumping almost four percent. You could give all the credit to a weakened yen which is making Japanese exports cheaper abroad and thereby boosting business. But Japan isn’t the only place where the stock market is booming right now. Markets in the U.S. and even Europe are up as well.
The upswing comes as investors are feeling more confident about the eurozone debt crisis, U.S.’s fiscal future, and the stability of China’s growth.
“January was the first month that individual investors stopped buying so many bonds and went into stocks, that’s a positive thing,” says Juli Niemann of Smith Moore & Company.
But all the optimism may bring new risks. According to Bob Mckee of Independent Strategy, the markets may have gotten ahead of themselves.
“The U.S. is growing just at only two percent a year, Europe is not really growing at all, Japan is also stagnant. Unless we see faster growth, the markets will get worried again that governments can’t meet their promises on their fiscal and public finances,” says McKee.