Japanese shares extend rally as tech stocks drive gains

Japanese stocks closed higher on Wednesday, extending the previous session's gains as softer-than-expected US inflation data lifted global market sentiment and eased concerns about a near-term Federal Reserve interest rate hike.

The Nikkei 225 rose 1.49% to 68,751, while the Topix Index gained 1.22% to 4,088. Investors largely looked past rising tensions in the Middle East, even after the US carried out fresh strikes on Iran and reinstated its naval blockade near the Strait of Hormuz.

Meanwhile, Japan's machinery orders fell more than expected in May, pointing to weaker business investment. Despite the soft domestic data, technology and AI-related stocks led the rally, with strong gains in Kioxia Holdings, Advantest, Tokyo Electron, Taiyo Yuden, and Lasertec.

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