Japan’s Nikkei 225 reached its pre-crash peak in 1989, closing at a record high on December 29 of that year.
The peak came at the end of Japan’s asset-price bubble, a period in which land and share prices rose dramatically. Easy credit, optimistic expectations, and rapid financial expansion helped push asset valuations far above levels supported by underlying economic conditions.
After monetary policy tightened, the bubble burst. Japanese share prices fell sharply, while land prices also declined for many years. The prolonged economic stagnation that followed is often called Japan’s Lost Decades.
The Nikkei’s 1989 peak is frequently confused with the later date when the market’s decline became unmistakable. The important historical marker is the record close at the end of 1989; the consequences continued through the 1990s and beyond.