FX168 Financial News Agency (Asia Pacific) News: Boosted by a strong overnight closing on Wall Street, the Japan nikkei index surged significantly on Tuesday (December 3), led by major chip stocks, and closed at its highest level in three weeks.

At the close, the nikkei/yen rose by 1.9% to 39,248.86 points, with an intraday increase exceeding 2% at one point. The broader tosei index increased by 1.4% to 2,753.58 points. #japan market#

Out of the 225 components of the nikkei 225 index, 197 rose, 25 fell, and 3 were untraded.

Among the 33 sectors in the tokyo exchange, sectors such as shipping and electrical machinery, which are viewed as cyclical industries, performed particularly well. Shipping company Kawasaki Kisen increased by 4.9%.

The stock market rallied across the board, with the nikkei index closing above 39,000 points for the first time since mid-November. Benefiting from improved economic conditions, cyclical stocks (such as those in shipping) performed well following better-than-expected overnight manufacturing data from the usa.

Both the nasdaq and s&p 500 index reached historic closing highs on Monday, thanks to further momentum in technology-related stocks following strong market performance in November.

Traders noted that due to the significant rise in the tokyo stock market, the yen, viewed as a safe-haven asset, was sold off, causing the exchange rates of the dollar against the yen to rise to a low range of 150 yen.

Japan's major technology stocks followed the upward trend, with semiconductor manufacturing giant tokyo electron ltd. unsponsored adr rising by 4.3%, contributing 98 points to the nikkei index's nearly 736-point increase.

SoftBank Group, focused on investing in ai startups, rose by 2.7%, while chip testing equipment manufacturer Advantest increased by 3.9%.

Other chip-related companies performed equally well, with Discus and laser technology company Lasertec soaring by 6.1% and 4.3% respectively, becoming one of the best performers ranked by gain in the nikkei/yen.

The gains are not limited to chip stocks. Among other major stocks, fast retailing, the parent company of Uniqlo, rose by 2.5%, providing the largest single boost to the nikkei/yen. Electronic component manufacturer TDK increased by 1.9%, and semiconductor wafer manufacturer Shin-Etsu Chemical rose by 1.2%. Auto manufacturers Toyota and Honda gained 1.6% and 1.4% respectively.

"Last week, the Japanese stock market was under pressure due to cautious sentiment regarding the impending Trump administration potentially raising tariffs," said Maki Sawada, an analyst at Nomura Securities.

Sawada added that there are signs of buybacks this week in sectors that performed poorly last week.

Analysts noted that the export control entity list announced by the usa government on Monday excluded Japanese companies and is aimed at limiting china's access to advanced technology, easing market concerns about the potential impact of these restrictions on Japan's chip industry.

"Although there have been recent reports of exemptions, investors have remained cautious, and the latest news has provided some degree of comfort," said Masahiro Ichikawa, Chief Market Strategist at Sumitomo Mitsui DS Asset Management.

However, he added that the market needs more time to assess the policies that President Trump will implement upon taking office and the profitability of Japanese companies, so it is uncertain whether the stock market will continue to rise.

Trump's upcoming commitment to introduce new tariffs has raised concerns about global trade.