Japan's Nikkei index surged Tuesday, gaining over 1,000 points to briefly trade above 38,000 for the first time in 34 years in a buying spree after a major technology firm revised its profit projections upward.
The 225-issue Nikkei Stock Average ended up 1,066.55 points, or 2.89 percent, from Friday at 37,963.97, its highest close since January 1990. The single-day point rise was also the Nikkei's highest since March 25, 2020.
The broader Topix index finished 54.15 points, or 2.12 percent, higher at 2,612.03, its highest close since February 1990.
Tokyo markets were closed on Monday for a public holiday.
On the top-tier Prime Market, gainers were led by insurance, electric appliance and service issues.
The U.S. dollar briefly strengthened to 149.64 yen in Tokyo, its highest level against the Japanese currency since Nov. 27. Brokers said some traders opted to sell due to the proximity to the psychologically important 150 yen line against the dollar.
Overall activity was limited, however, ahead of the release of January U.S. consumer price data, which can help gauge the extent to which the Federal Reserve has managed to tame inflation and when interest rate cuts in the United States could begin.
At 5 p.m., the dollar fetched 149.58-59 yen compared with 149.32-42 yen in New York at 5 p.m. Monday.
The euro was quoted at $1.0771-0773 and 161.12-16 yen against $1.0766-0776 and 160.82-92 yen in New York late Monday afternoon.
The yield on the benchmark 10-year Japanese government bond rose
0.005 percentage point from Friday's close to 0.725 percent. Trading was subdued due to the wait-and-see mood ahead of the U.S. CPI.
Tokyo stocks were up throughout the day, with the Nikkei briefly above 38,000 for the first time since January 1990. The benchmark index rose for a third straight day, bringing it closer to its all-time high of 38,915.87 on Dec. 29, 1989, when Japan was experiencing an asset price bubble.
Analysts said the market was lifted by participants returning to Tokyo markets after an extended weekend in which domestic firms' favorable quarterly earnings reports lifted optimism, while the U.S. Dow Jones index hit a new all-time high and European shares gained.
Among the biggest risers was major semiconductor manufacturing equipment maker Tokyo Electron, which surged over 13 percent after revising up on Friday its profit forecast for the year ending March.
Its results had helped fuel wider buying in the tech industry on hopes for generative AI-led growth, according to analysts.
"The latest financial reports from companies have not disappointed investors, and with the outlook generally looking good for the next quarter, participants are feeling there's no need for pessimism," said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.