Japan’s stock-market bubble burst after the Nikkei 225 reached its all-time closing high on December 29, 1989.
The index closed at 38,915.87 that day. In the following years, Japanese share prices and urban land values fell dramatically, damaging banks, businesses, and household wealth. The prolonged aftermath is often called Japan’s Lost Decades.
The bubble had been supported by rapid credit growth, high asset valuations, and optimistic expectations. The Bank of Japan tightened monetary policy in the late 1980s, and the financial system later struggled with nonperforming loans as property and equity prices declined.
The Nikkei’s 1989 peak is different from a one-day crash. It marked the high point before a long, grinding collapse. The index did not regain that closing level until 2024, making the episode one of the clearest examples of how difficult recovery from an asset bubble can be.