Japan's Nikkei rises as market gauges US election outlook, yen strength

Japan's markets were closed on Monday for a public holiday.

U.S. ended higher on Monday as bets of a second Trump presidency raised hopes of a looser regulatory environment.

"If Trump were to aggressively implement measures like tax cuts, the stock is likely to rally," said Masahiro , chief market strategist at Sumitomo Mitsui DS Asset Management.

Those expectations prompted buying in areas such as high tech and electronic component in Japanese shares on Tuesday, he said.

Mitsubishi Heavy Industries was among the top gainers with a 6% jump, as speculation of a Trump win spurred what has been so-called "Trump trades" among Japanese stocks.

With a Trump administration expected to be less likely to involve the U.S. in overseas affairs, there's speculation that Japan may have to strengthen its defences, putting attention on defence-related shares, Ichikawa said.

Investors were also weighing the growing probability that the U.S. Federal Reserve will begin cutting its key , particularly its impact on dollar/yen.

The yen has suddenly strengthened against the dollar since Thursday.

While many suspect Tokyo may have intervened to lift the currency off 38-year lows, market players want more clarity on the path of the yen, said Masayuki Kubota, chief strategist at Rakuten Securities.

"The market is trying to determine ... whether this is a temporary appreciation of the yen and it will weaken again, or whether the yen's slide is over because the U.S. is about to begin cutting rates."

In individual stocks, TDK Corp climbed 4.2%, Tokyo chip-making equipment giant Tokyo Electron rose 0.9%, and SoftBank Group gained 1.1%.

Shares of Kawasaki Heavy Industries advanced 5.4%.