The Nikkei 225 peaked before Japan’s early-1990s asset-price crash.
The index reached an all-time closing high of 38,915.87 on December 29, 1989, at the end of Japan’s asset-price bubble. Japanese stock and land prices had risen dramatically during the 1980s, supported by abundant credit, optimistic expectations, and aggressive lending.
After the Bank of Japan tightened monetary policy and financial conditions changed, asset prices fell. The Nikkei declined for years, while falling land values weakened banks, businesses, and household balance sheets. The prolonged economic consequences are often associated with Japan’s “Lost Decades.”
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange’s Prime Market. A common mix-up is treating the Nikkei’s 1989 peak as a single-day crash; it was the high point before a long bear market rather than one isolated collapse.