TOKYO: Japan’s Nikkei share average rose more than 1% on Tuesday, led by defence stocks as former defence minister Shigeru Ishiba is set to become the country’s next prime minister.

The Nikkei had gained 1.47% to 38,476.33 by the midday break after falling nearly 5% in the previous session. The broader Topix rose 1.23% to 2,678.4.

Heavy machinery makers were the top three percentage gainers on the Nikkei, with Kawasaki Heavy Industries jumping 8.32%, while Mitsubishi Heavy Industries and IHI climbed 7.82% and 6.95%, respectively.

Ishiba is set to be voted in by parliament as Japan’s next prime minister later in the day and unveil his cabinet.

A close Ishiba ally, Takeshi Iwaya, a former defence chief, will take over as foreign minister, while Gen Nakatani will return to the defence ministry.

“The market expected those defence-related stocks would benefit after seeing reports about key members of the new cabinet,” said Tomochika Kitaoka, chief equity strategist at Nomura Securities. Exporters also rose on the back of a weaker yen.

The dollar strengthened after Federal Reserve Chair Jerome Powell pushed back overnight against bets on more supersized interest rate cuts. Toyota Motor climbed 0.9% and Honda Motor gained 1.72%.

A softer yen tends to help exporter shares as it increases the value of overseas profits in yen terms when firms repatriate them to Japan.

Japan’s Nikkei ekes out gains in choppy trade

“The Nikkei returned to where it was a week ago and it will stay around this level for a while. But the Japanese equities are lagging behind their global peers, so they could rise further if there is a trigger,” said Kitaoka.

Chip-related heavyweights rose, with Tokyo Electron and Advantest gaining 3.01% and 2.11%, respectively.