The Nikkei 225 was the Japanese stock index whose peak marked the beginning of Japan's asset-price crash.
The Nikkei reached an all-time closing high of 38,915.87 on December 29, 1989. That peak came after years of soaring property and share prices, easy credit, and strong optimism about Japan's economic power. Land values in major cities also reached extraordinary levels.
The Bank of Japan tightened monetary policy in the late 1980s and early 1990s. Higher interest rates helped deflate the speculative boom, and falling asset prices weakened banks, businesses, and household balance sheets. The Nikkei then entered a prolonged decline.
The crash did not end with one dramatic trading session. Japan experienced a long period of economic stagnation, often called the Lost Decades, as banks worked through bad loans and companies reduced debt and investment. The index remained far below its 1989 peak for decades.
A common mix-up is treating the Nikkei 225 as Japan's only stock index. TOPIX is another major Japanese benchmark, but the Nikkei's precise 1989 peak is the figure most often cited in accounts of the bubble's collapse.