Japanese stocks posted their sixth straight day of gains on Wednesday, as the Nikkei 225 (NIKKEIINDICES:^NI225) climbed 137 points, to 18,323. Investors focused largely on the Bank of Japan's decision not to make any changes to its current quantitative easing policy, under which it's spending 80 trillion yen per year on asset purchases to try to stimulate greater economic activity by keeping interest rates low.
Even though the central bank didn't move now, many still expect it to announce an increase in the amount of spending as soon as the end of this month. That seems to be bolstering market sentiment after a tough summer quarter.
Some of the top performers in the Japanese market Wednesday benefited from a big increase in energy prices, with crude oil rising about $3 per barrel during the past 24 hours. Mitsubishi climbed 7%, with the conglomerate getting about a quarter of its overall revenue from its energy business, and natural-resources specialist Inpex also contributed to the Nikkei's overall gains with a 7% advance. Industrial stocks also fared well, especially those with an export focus like Honda Motor, which was up 5%.
Offsetting those gains were stocks in the pharmaceutical sector, several of which lost ground. Chugai Pharmaceutical fell almost 3%, while Astellas Pharma was off 2%. Electronics company Alps Electric led decliners with a drop of almost 4%.
How long can the streak last?
It's easy to get excited about a long string of gains for any stock market, but it's still important to put the Nikkei's rebound in the proper perspective. Even with its gains, the Japanese stock market has only recovered to its levels in mid-September, and it's still down almost 2,500 points from where it was in early August.
Moreover, despite optimism about the potential for further economic stimulus, Japan has yet to demonstrate that its past measures have been fully effective. In large part, the biggest benefit to past Japanese economic policy has come from the weakness in the yen that it has caused.
Concerns about competitive currency weakening among major countries around the world are already weighing on overall global market sentiment. At a time when investors are worried about the current level of central bank intervention in the financial markets, the prospect of even more moves to spur growth raise mixed emotions, at best.
After a long-awaited correction, it's entirely possible that the Nikkei will continue to follow the U.S. stock market higher in a broader rebound. What long-term investors need to focus on is whether efforts from policymakers worldwide are successful in achieving their true goals of sustainable growth in the global economy.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.