Tokyo stocks rose for the fourth straight day renewing 33-year highs Wednesday, boosted by the view that the U.S. Federal Reserve will skip an interest rate hike and speculation that Japanese Prime Minister Fumio Kishida will call for a snap election soon.
The 225-issue Nikkei Stock Average ended up 483.77 points, or 1.47 percent, from Tuesday at 33,502.42, its highest close since March 9, 1990, when Japan was experiencing an asset price bubble.
The broader Topix index finished 29.74 points, or 1.31 percent, higher at 2,294.53, its highest close since July 25, 1990.
Gainers were led by transportation equipment, iron and steel, and nonferrous metal shares.
The U.S. dollar remained firm around the 140 yen line as the U.S. consumer price index for May showed inflation remaining above the Fed's desired level despite slowing, prompting speculation an interest rate hike may be forthcoming in July, dealers said.
At 5 p.m., the U.S. dollar fetched 139.98-140.00 yen compared with 140.19-29 yen in New York and 139.48-50 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.0788-0790 and 151.02-06 yen against $1.0788-0798 and 151.23-33 yen in New York, and $1.0799-0800 and 150.63-67 yen in Tokyo late Tuesday afternoon.
The yield on the benchmark 10-year Japanese government bond rose 0.010 percentage point from Tuesday's close to 0.425 percent, tracking an overnight rise in long-term U.S. Treasury yields.
Tokyo stocks traded higher throughout the day, with the Nikkei extending gains in the afternoon to end at a fresh 33-year high for the second consecutive day.
The upward momentum mirrored gains on Wall Street overnight after data showed U.S. inflation slowed to 4.0 percent in May from a year ago, reaffirming expectations of a pause in interest rate hikes by the Fed, analysts said.
Buying also took the upper hand after Kishida said Tuesday he will decide when to dissolve the lower house after reassessing "various circumstances," amid growing speculation that he will call for a snap election by the end of the ongoing Diet session through June 21, analysts said.
As stocks have risen in the past during elections, "the expectation that there might be upward movement due to such anomalies supports buying," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.
The weak yen against the dollar also buoyed stocks, as investors in the bond market were more focused on a possible U.S. rate hike next month as core prices remained elevated and led to higher Treasury yields, analysts said.
"Even when looking at the same information, each market has different focal points," said Chihiro Ota, assistant general manager of investment research and investor services at SMBC Nikko Securities Inc.
Among export-oriented issues, optical equipment maker Olympus rose 55 yen, or 2.5 percent, to 2,257 yen, while electronic components maker TDK gained 75 yen, or 1.4 percent, to 5,628 yen.
Honda Motor climbed 157 yen, or 3.6 percent, to 4,536 yen after its aircraft division announced Wednesday it will launch a new light jet with improved fuel efficiency.