TOKYO: Japan’s Nikkei share average rose on Tuesday to a three-month high above the 40,000 level, as Wall Street’s strong finish overnight and a weaker yen buoyed investor sentiment.

The Nikkei gained 1.6% to 40,232.45 by the midday break, reclaiming the 40,000 level for the first time since July 19, as Japanese markets reopened after a public holiday on Monday.

The broader Topix was up 1.14% at 2,737.

Wall Street ended higher on Monday, with both the S&P 500 and the Dow Jones Industrial Average posting fresh record finishes. Shares of semiconductor star Nvidia rose to a record close as the sector outperformed.

In Japan, chip-related shares tracked their US peers higher, with Tokyo Electron and Advantest rising 5.07% and 3.53%, respectively.

AI-focused startup investor SoftBank Group Corp, whose subsidiary Arm Holdings climbed overnight, surged 6.85%.

The three stocks together offered the Nikkei a hefty lift.

Japanese equities were also supported by a softer yen, which tends to boost exporters’ overseas earnings when repatriated.

The yen was not far off Monday’s low of 149.98, its lowest level against the dollar since early August.

Among big export names, automaker Toyota Motor edged up 0.39%, while tech and entertainment conglomerate Sony Group rose 0.64%.

Japan’s Nikkei firms on Fast Retailing, chip share gains

Along with the softer yen, which is seen benefiting Japanese firms this quarter, some companies like Fast Retailing have set a positive tone by posting record earnings, said Sean Teo, a sales trader at Saxo Singapore.

“We might see this trend continue throughout the earnings season,” although US corporate earnings may face challenges due to a still high-interest rate environment, he said.

The largest percentage gainer in the Nikkei was Lasertec Corp, which rose 7.38%.