Japan’s stock market peaked in December 1989 before a prolonged crash.
The Nikkei 225 reached its historic closing high of 38,915.87 on December 29, 1989. The peak came after years of rapid increases in Japanese share and land prices, supported by easy credit, strong optimism, and financial speculation. The period is commonly called Japan’s asset price bubble.
After the bubble burst, Japanese equities and property values fell for years. The Nikkei’s decline contributed to a long period of weak growth, banking stress, and deflation often described as Japan’s “lost decades.” The market did not quickly return to its 1989 level.
The 1989 peak is sometimes confused with the later 1990 beginning of the market’s steep decline. December 29 marks the record closing high, while early 1990 is associated with the reversal becoming unmistakable. Japan’s experience also influenced later discussions of balance-sheet recessions and the risks of prolonged asset-price deflation.