Japan’s stock market crashed after the Nikkei 225 reached its record closing high on 29 December 1989. The index closed at 38,915.87, marking the peak of Japan’s late-1980s asset-price bubble.
The bubble affected both equities and real estate. Easy credit, rising land prices, financial speculation, and optimistic expectations pushed asset values to extraordinary levels. When monetary policy tightened and confidence changed, prices began a prolonged decline.
The Nikkei’s fall became a symbol of Japan’s “Lost Decades,” a period marked by weak growth, banking problems, deflationary pressure, and repeated attempts to repair balance sheets. The index did not regain its 1989 closing peak for decades.
The crash was not a single day in the same way as Black Monday in 1987. It was a long market decline following a specific peak. The related property collapse also damaged banks, because loans had been secured against land whose prices subsequently fell sharply.