The Nikkei rose 4.3% today to 9,608. Another two days of similar gains would put the index at nearly 10,550, which is close to where it traded before the devastating earthquake and tsunami.

It will be phenomenal if the index can claw its way back so quickly, but it shows how versatile equities prices all over the world have become. Markets in Europe have mostly shrugged off the sovereign debt trouble there. Many indexes in the regions trade above where they were six months ago.

The Nikkei’s rise is driven by several things, all of them still dangerously unstable. The first is the impression that the worst of the disaster is behind Japan. This includes the trouble at the Fukushima Daiichi nuclear plant. News reports say that Tokyo Electric is closer to a containment solution for the radioactive leaks from the facility. Other experts disagree and view the situation as unstable at best.

Another reason for the rise of Japanese markets is that GDP there will drop slightly and then rebound sharply as business activity rises with the construction it will take to repair and rebuild devastated areas. The side effect of these measures is that Japan will increase its already dangerous national debt levels. That could easily threaten its sovereign debt rating and substantially increase its borrowing costs. Japan’s austerity plans could be dashed by reconstruction costs.

Another “positive” which followed the disaster is the Bank of Japan and G7 interventions on the price of the yen. The currency had risen enough to threaten the profitability of exporters. There is a hope that the yen will return to pre-crisis levels and companies like Honda (NYSE: HMC) and Sony (NYSE: SNE) will be able to better compete in global markets. That depends on whether yen intervention is constant and works well into the future if necessary.

The last piece of positive outlook about Japan’s business prospects is that most of its manufacturing facilities which were closed by the quake will reopen soon. The flow of cars and consumer electronics will resume. The business interruption will have been short-lived. The earnings at the companies affected will not last very long and are already anticipated by the market. Some of those assumptions may be true, but there is hardly data factory-by-factory about how soon facilities will be restarted. The ripples into the global supply chains of everything from GM (NYSE: GM) cars and Apple (NASDAQ: AAPL) iPads is hardly predictable.

Japan’s markets may be on their way back to where they traded a month ago, but they trade on a very soft foundation.

Douglas A. McIntyre

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