Japan's Nikkei hits record high as chip-related shares track US peers

"The market expects Powell's comments will indicate , which lifted U.S. chip stocks overnight and the Japanese chip makers tracked the trend," said Takehiko Masuzawa, trading head of .

The S&P 500 and notched record-high closes on Monday, with Nvidia rising 2% and Intel rallying more than 6%, lifting the Philadelphia semiconductor index 1.9%.

Powell will speak to Congress on Tuesday and Wednesday.

Traders now see a greater than 75% chance of a rate cut of at least 25 basis points by September, up from last week's 60%, according to CME's FedWatch.

In Japan, chip-making equipment maker Tokyo Electron jumped 3.88%, giving the biggest support to the Nikkei. Chip-testing equipment maker Advantest climbed 3.17%.

The U.S. rate cut expectations weighed on Japanese bank stocks, sending the banking index 0.59% lower. The index for value shares inched up 0.19%, while the growth stock index jumped 1.07%.

The broader Topix was up 0.62% to 2,885.37.

Investors were cautious about the possible impact of a sell-off in exchange-traded funds on Wednesday, a move to distribute payouts, which market players estimated to be worth about 750 billion yen ($4.66 billion), said Phillip Securities Japan's Masuzawa.

($1 = 160.9800 yen)