Japan's Nikkei Hits Highest in 33 Years

The Nikkei 225 index in Japan rose to its highest level since July 1990 on Monday, boosted by optimism about a debt-ceiling agreement in the United States and a weaker yen.

After Wall Street peers were lifted by AI euphoria, shares of Japanese chip-related companies continued to outperform.

The Nikkei 225 jumped as high as 31,560.43 in the first ten minutes of trading, but gains were mitigated and the index ended the day up 1.32 percent at 31,325.84, close to the session low.

US President Joe Biden said on Sunday that he and House Speaker Kevin McCarthy had finalised a budget agreement, and that it was ready for a vote in Congress. The agreement, however, has sparked criticism from both hardline Republicans and progressive Democrats.

"The deal isn't done yet, so there's still a level of risk," said Maki Sawada, a strategist at Nomura Securities. "However, the basic agreement has seen risks recede and both sides have committed to avoiding a technical default."

"The Nikkei crossed the psychological 31,500 mark on Monday, but that level proved a little too heavy in the end," she explained. "I expect the Nikkei to continue to rise this week, but with short-term retracements to keep its momentum in check."

The broader Topix rose to 2,175.13, but fell short of last week's 33-year high of 2,188.66. At 2,166.41, it entered the break up 0.96 percent.

Because of the Nikkei's higher weightage in exporter stocks, it reaped greater benefits from the yen's drop to the brink of 141 per dollar for the first time in six months. A weaker currency raises the value of foreign revenue.

Honda Motor gained 1.86 percent, while Subaru gained 1.78 percent.

Advantest, a chip-testing equipment maker with Nvidia Corp as a client, was the Nikkei's joint top performer.

Advantest shares rose to a record high of 6.9 percent, though they entered the break up 4.18 percent, tied with Nikon and startup investor SoftBank Group.

The Nikkei's 225 components rose 193, fell 27, and were flat.