The Tokyo stock market ended higher Tuesday, with the key Nikkei and Topix indexes closing at their highest levels in 31 years, as progress in Japan's COVID-19 vaccination efforts lifted expectations for broader economic activity and hopes grew for possible stimulus under a new prime minister.
The 225-issue Nikkei Stock Average ended up 222.73 points, or 0.73 percent, from Monday at 30,670.10, its highest finish since Aug. 1, 1990, when the Japanese economy was experiencing an asset-inflated bubble.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished up 21.16 points, or 1.01 percent, at 2,118.87, its highest close since Aug. 3, 1990.
Gainers were led by insurance, marine transportation, and oil and coal product issues as well as the retail and restaurant sectors. Among the 33 sectors of the Nikkei subindexes, 29 ended higher.
The U.S. dollar stayed around the 110 yen line as investors awaited U.S. consumer price index data for August, to be released later in the day, dealers said.
At 5 p.m., the dollar fetched 110.00-01 yen compared with 109.95-110.05 yen in New York and 110.08-09 yen in Tokyo at 5 p.m. Monday.
The euro was quoted at $1.1824-1826 and 130.07-11 yen against $1.1805-1815 and 129.87-97 yen in New York and $1.1786-1787 and 129.74-78 yen in Tokyo late Monday afternoon.
The yield on the benchmark 10-year Japanese government bond was unchanged from Friday's close at 0.040 percent, as investors refrained from making bold moves ahead of the release of the U.S. consumer price index, dealers said. The bond was untraded Monday.
The price data could influence when the U.S. Federal Reserve starts reducing its massive bond purchases, they said.
The stock market got a boost a day after the Japanese government said more than half of the country's population has been fully vaccinated against the coronavirus.
The benchmark Nikkei briefly rose more than 300 points, with the vaccination rate in Japan now approaching levels in the United States and major European countries.
Market participants expect the progress in inoculations to lead to an easing of restrictions in the restaurant, retail and tourism sectors in particular, brokers said.
"With fewer daily coronavirus cases recently in the United States and Japan, investors view both economies as on track to return to normal," said Toshikazu Horiuchi, an equity strategist at IwaiCosmo Securities.
Tuesday's gains added momentum to the recent market uptrend triggered by Prime Minister Yoshihide Suga's announcement earlier this month that he will not run in the ruling Liberal Democratic Party's leadership race.
The announcement, made amid growing public criticism over his government's coronavirus response, sparked strong buying by foreign investors who have been net-sellers recently, as it raised hopes that Suga's successor will craft a fresh stimulus package, brokers said.
Ahead of a general election this fall, Japan's new prime minister will be effectively picked in the LDP's presidential election on Sept. 29 as the party controls the more powerful House of Representatives.
On the First Section, advancing issues outnumbered decliners 1,707 to 380, while 101 ended unchanged.
Oil-related issues gained after U.S. crude oil futures rose to their highest levels in a month overnight on expectations of tighter supply due to production disruptions by Hurricane Ida and another tropical storm expected to hit Texas.
Refiners Eneos Holdings climbed 5.70 yen, or 1.3 percent, to 461.00 yen, Idemitsu Kosan rose 92 yen, or 3.3 percent, to 2,842 yen and Cosmo Energy Holdings jumped 105 yen, or 4.5 percent, to 2,454 yen.
Among restaurant operators, Royal Holdings gained 28 yen, or 1.3 percent, to 2,163 yen and Watami climbed 12 yen, or 1.2 percent, to 1,052 yen.
Shares related to leisure activities were also higher. Tokyo Disney Resort operator Oriental Land rose 555 yen, or 3.4 percent, to 17,095 yen. Travel agencies H.I.S. added 74 yen, or 3.2 percent, to 2,403 yen and Knt-Ct Holdings was up 41 yen, or 3.0 percent, at 1,423 yen.
Trading volume on the main section rose to 1,339.01 million shares from Monday's 1,135.44 million shares.