The Nikkei 225 index rose 1% to a record high of 48,544.0 points, the TOPIX hit a high of 3,248.39 points, STI index soared 0.9%, while ASX 200 dropped 0.3%

Asian stocks rose on Tuesday on persistent optimism over artificial intelligence. Japanese markets continued to outperform, hitting new record highs after rallying as the election of a fiscally dovish prime ministerial candidate dampened bets on more interest rate hikes by the Bank of Japan.

But Asian trading volumes were muted on account of market holidays in China, Hong Kong, and South Korea.

Globally, risk appetite was also dented by an ongoing political crisis in France.

The Nikkei 225 index rose 1% to a record high of 48,544.0 points, while the TOPIX hit a high of 3,248.39 points. Both indexes traded below their highs by 02:12 GMT.

Industrials continued to lead the index higher, while chipmakers also rose.

Japanese stocks rallied on Monday after conservative politician Sanae Takaichi was elected as the leader of the ruling Liberal Democratic Party over the weekend, setting her up to become Japan’s first female prime minister. A parliamentary session on the matter is set to take place in mid-October.

Takaichi is widely viewed as a fiscal dove, and is expected to dole out more expansionary fiscal policies. She has also largely opposed the BOJ’s raising of interest rates, and has called for more accommodative policies to support a sluggish economy.

The prospect of more government support boosted Japanese stocks, with industrials benefiting from bets that Takaichi’s government will ramp up spending on manufacturing and defence industries.

But questions over just how Takaichi will fund additional fiscal spending remained, weighing on the Japanese yen and government bonds.

Asian tech stocks were the best performers for the day.

Among individual movers, TSMC gained 2.5% and was near a record high.

Advantest Corp. and Tokyo Electron added 2.2% and 1%, respectively, while Renesas Electronics Corp rallied 4.6%.

Among broader Asian markets, STI index soared 0.9%, while ASX 200 dropped 0.3%. Exchange operator ASX Ltd declined nearly 2% after rival Cboe was approved to operate as a listing market for securities, heralding more competition in the sector.