The Nikkei 225 index rose 0.5%, above 39,000, while the broader Topix index gained 0.35%, reaching 2,720 on Tuesday, extending gains from the previous session. The rally followed U.S. President Donald Trump's decision not to impose new tariffs on his first day in office, easing concerns for Japanese exporters.

However, investors remained cautious ahead of the Bank of Japan's upcoming monetary policy decision this week, as BOJ officials have hinted at a potential interest rate hike. The move would raise Japan's short-term borrowing costs to 0.5%, the highest level since the 2008 global financial crisis. Export-driven companies led the rally, with Disco up 2.5%, Toyota Motor up 2%, Tokyo Electron up 1.5%, Nintendo up 0.8% and Fast Retailing up 0.4%. Meanwhile, Metaplanet fell 14% after surging more than 30% over the previous two sessions, linked to its Bitcoin-related activity.(AL)

Source: Trading Economics