Nikkei reaches 34-year high on Wall Street surge

Nikkei hit 34-year high: Japan's Nikkei share average achieved a 34-year peak on Tuesday, propelled by gains in chip shares following Wall Street's ascent to a new record high. 

Despite investor caution ahead of the Bank of Japan's (BOJ) monetary policy decision later in the trading day, the index demonstrated resilience. 

While market players anticipate no change to the existing stimulus, they are eagerly seeking any indications regarding the potential timing of an exit from negative interest rates.

The BOJ decision is expected to be announced between 01:30-05:00 GMT, with Governor Kazuo Ueda scheduled to hold a news conference around 06:30 GMT. 

After the market opened, the Nikkei reached as high as 36,877.41, marking its highest point since February 1990, before moderating gains to a 0.7 per cent increase at 36,803.41 as of 01:25 GMT.

Semiconductor-sector stocks, including Lasertec, up by 3.25 per cent, and Screen Holdings, up by 2.27 per cent, outperformed, contributing to the overall positive trend. Heavyweights Tokyo Electron and Advantest also posted gains of 0.3 per cent and 0.43 per cent, respectively.

The broader Topix index advanced by 0.5 per cent, reaching a new multi-decade high earlier in the session. 

The Topix index of growth shares outpaced value shares with a 0.84 per cent jump, compared to a 0.14 per cent gain in value shares.

The previous day, the US S&P 500 achieved a record high for the second consecutive session, with notable gains in tech stocks. Analysts pointed to the retreat in bond yields as a contributing factor, with the 10-year US 

Treasury yield dipping to 4.075 per cent on Monday from 4.198 per cent at the end of the previous week.

Kazuo Kamitani, an equity strategist at Nomura Securities in Tokyo, remarked, "In the absence of any clear drivers, stocks seemed to like the retreat in bond yields." 

He further suggested that if yields remain subdued, US stocks stay firm, and the yen remains stable at around 148 per dollar, the Nikkei hitting 37,000 would not be unexpected.

Despite this optimism, analysts stressed upon the need to await the outcome of the BOJ meeting before making proactive market moves.

(With Reuters Inputs)