The Nikkei stock index closed at an all-time high Thursday, breaking the previous record set more than 30 years ago, as expectations grew for another year of record profits and Japan's return to steady growth.

The 225-issue Nikkei Stock Average ended up 836.52 points, or 2.19 percent, from Wednesday at 39,098.68, topping the previous closing high of 38,915.87 marked in December 1989, when Japan was experiencing an asset price bubble.

The broader Topix index finished 33.41 points, or 1.27 percent, higher at 2,660.71, its highest level since February 1990.

A financial data screen in Tokyo on Feb. 22, 2024, shows the 225-issue Nikkei Stock Average ending at 39,098.68. (Kyodo)

On the top-tier Prime Market, gainers were led by transportation equipment, electric appliance and machinery issues.

The U.S. dollar remained firm in the lower 150 yen range as the currency was bought following an overnight rise in long-term U.S. Treasury yields.

At 5 p.m., the dollar fetched 150.12-14 yen compared with 150.25-35 yen in New York and 150.14-16 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.0852-0853 and 162.92-96 yen against $1.0814-0824 and 162.57-67 yen in New York and $1.0810-0811 and 162.31-35 yen in Tokyo late Wednesday afternoon.

The yield on the benchmark 10-year Japanese government bond dipped 0.005 percentage point from Wednesday's close to 0.715 percent.

The Tokyo stock market has been on an upswing since the beginning of 2024, with the Nikkei benchmark rising nearly 17 percent from its 2023 closing level at 33,464.17.

The Nikkei index on Thursday surged past the 39,000 threshold for the first time, hitting an all-time intraday high of 39,156.97, as semiconductor-related Tokyo Electron and Advantest drew strong buying following robust earnings results from U.S. chip giant Nvidia Corp.

The company reported Wednesday that its net profit in the quarter ended January jumped 8.7-fold from a year earlier to a record $12.3 billion, exceeding market expectations, on robust demand for artificial intelligence development.

"Nvidia was able to surpass the high expectations placed on it, with the results clearly demonstrating the growing need for artificial intelligence," said Makoto Sengoku, senior equity market analyst at the Tokai Tokyo Research Institute.

Meanwhile, Toyota Motor and Honda Motor were among the exporters that were boosted by the yen's slight depreciation against the U.S. dollar. A weaker yen boosts their overseas profits when repatriated.

Despite some warnings that stocks were "overheating slightly" due to their rapid climb, Sengoku noted they were "unlikely to enter a correction" as listed companies have submitted plans to increase their corporate value and have continued posting individual peaks.

The all-time high comes amid expectations that the combined net profit of major Japanese companies listed on the bourse will reach a record high for the third consecutive year in fiscal 2023 ending next month, driven by the weak yen and growing demand sparked by inbound tourism.

Market participants are becoming increasingly convinced that Japan will exit from its long-standing battle against tepid wage increases and deflation, and get onto a steady growth path.

But some investors were cautious about whether the upward momentum could be maintained, citing the U.S. presidential election in November and a potential shift by the Bank of Japan from its long-held ultraloose monetary policy.

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