Expect the 225-issue Nikkei average’s upward momentum to continue, analysts say, as the benchmark index hit a new 26-year high Tuesday on the back of gains in U.S. shares and a solid corporate earnings outlook.

The Nikkei ended trading up 0.57 percent at 23,849. 99 after the market reopened following a holiday on Monday. During early trading, it hit 23,952.61, its highest since November 1991. Analysts said risk appetite remained strong as gains extended on Wall Street, even as Friday’s release of the U.S. jobs report for December failed to meet expectations. On Monday, the Standard & Poor’s 500 index and Nasdaq composite extended their winning streaks while the Dow Jones industrial average edged down 0.05 percent.

Tatsunori Kawai, investment strategist at Kabu.com Securities, said the Nikkei’s solid performance was supported by global growth and expectations of strong third-quarter corporate earnings, which will be released beginning late January. Shares were also backed by a weaker yen, he said. The dollar traded at around ¥112.66 late Tuesday compared with ¥110 forecast by most listed companies for the fiscal year ending in March 2018.

“A combination of external factors and strong corporate fundamentals is supporting share prices. It’s pretty straightforward,” he said.

The Nikkei gained more than 900 points last week after the market opened for the year’s first trading on Thursday. Kawai said some players who missed the boat during the two-day surge last week were interested in buying on Tuesday, supporting share prices.

Kawai added that Japanese stocks are currently trading at about 15 times projected earnings — a mere fraction of the aggressive valuations during the asset price bubble in the late 1980s and early 1990s — giving space for further market gains. Looking at 2018, he projected the index to trade in a range of 23,000 to 27,000.

Yoshinori Ogawa, strategist at Okasan Securities, agreed that the Nikkei’s strong momentum will likely continue. Ogawa projects the index would climb to around 25,000 to 26,000. He’s calculation is based on expectations that earnings per share for Nikkei issues will grow about 5-10 percent in fiscal 2018, bringing the figure to roughly ¥1,600 from around ¥1,500 now.

“I think that level is entirely realistic considering the potential of Japanese corporations,” he said, adding that he expected the high-tech sector to be one of the biggest gainers in 2018.

“There are many companies that are working on structural reforms, selecting and concentrating their businesses,” he said. “If those efforts lead to higher corporate earnings, like in the case of Sony Corp., I think the sector will be attracting a lot of attention,” he said.

In October, Sony, which is undergoing a restructuring drive focusing on image sensors and gaming, raised its full-year operating profit forecast by 26 percent to ¥630 billion, which would beat its current profit record set in the fiscal year that ended in March 1998.

Looking ahead, analysts warned of geopolitical risks from rising tensions on the Korean peninsula and conflict in the Middle East. The monetary policies of the U.S. Federal Reserve and the Bank of Japan are also being closely watched, they said.

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