Stock markets in the United States, Europe and Japan set record highs this week after Nvidia reported blowout quarterly earnings results and strong guidance after the closing bell on Wednesday. “Insatiable demand” for the company’s artificial intelligence chips lifted the stock more than 16%, leading the company to briefly surpass a $2 trillion valuation, and helped propel the broader market.

Investors will not have much in the way of economic data to wade through next week after a wave of conflicting reports on GDP, jobs, retail sales, and CPI inflation did little to settle the debate about whether the economy is more at risk of overheating or drifting into a recession.

It is clear that we are now on the path to new highs as the bull market rages on.

Future Wealth’s View

Throwing new money at Nvidia could still pay off even after the meteoric rise but there certainly other companies and sectors that look a lot more attractive instead of chasing Nvidia or the next Nvidia. While this country’s stocks have been under the radar, the Nikkei 225, Japan’s main stock index, closed at a new all-time high above 39,000, following a record run last seen during the country’s late-1980s asset bubble. In fact, the Nikkei has been the world’s best-performing major index in 2024, surging 17.5% only two months into the year and trouncing the advance of the S&P 500.

The question to ask is why has Japan emerged as the country to invest in now? There are several factors at play – a falling yen and the fading promise of China have lured foreign investors to Japan. Additional bright spots have been the corporate governance changes that have sent stock buybacks soaring, while excessive cash balance sheets have declined.

In our report on Jan 21, 2024, we had stated that “Japan offers an opportunity for investors after its years of malaise.” The link is here – While every investor’s core positions should be in the US stock market, looking at Japanese companies that have relatively low valuations, good cash flow and dividends would be an astute way for investors to hedge against a correction in the more expensive stocks in the US markets.