Asian markets finished higher on Tuesday, with the Nikkei extending a banner rally as stimulus comments made by Japanese Prime Minister Shinzo Abe late on Monday helped to weaken the yen.
The Nikkei 225 closed 2.46 percent, or 386.83 points higher, at 16,095.65 and the Topix finished up 2.38 percent, or 29.94 points, at 1,285.73, after both indexes tacked on nearly 4 percent each on Monday.
The Japanese yen continued to fall against the greenback, with the dollar-yen currency pair rising as high as 103.28 intraday after touching levels as low as 100.45 on Monday. At 4:27 p.m. HK/SIN, the dollar was fetching 103.14 yen. A weaker yen is generally seen as a positive for Japanese stocks because it makes the country's exports more competitive and it boost the value of repatriated earnings.
On Monday Abe, fresh from a big win in Japan's Upper House elections at the weekend, said that he planned to make "bold investment into seeds of future growth," Reuters reported. He did not set out the size of any fiscal stimulus spending, but analysts expected a "big bazooka" might be in the works. The market was also expecting the Bank of Japan would soon step up with further monetary stimulus.
"It was post-elections political will to swiftly, boldly and comprehensively boost fiscal stimulus (despite budget constraints) that motivated the yen drop," Mizuho said in a note Tuesday, citing expectations for more Japanese government bond issuance to finance that stimulus.
"Abe's rousing victory is far more important in reviving 'Abenomics' as a dynamo for economic recovery," Mizuho said, calling it "Abenomics Go," in reference to the wild success of the launch of Nintendo's Pokemon Go game.
In other Asian markets, the Hang Seng Index added 1.65 percent, or 344.24 points, to finish at 21,224.74. On the mainland, the Shanghai Composite closed up 1.83 percent, or 54.765 points, at 3,049.68, while the Shenzhen composite finished 1.2 percent, 24.04 points, at 2,025.02 after falling into negative territory earlier. In South Korea, the Kospi closed up 0.14 percent, or 2.69 points, at 1,991.23.
The ASX 200 finished up 0.3 percent, or 16.095 points, at 5,353.2, supported by heavily-weighted financial subindex and the materials subindex, which were up 0.43 percent and 0.95 percent respectively.