TOKYO -- Japan's blue-chip Nikkei Stock Average surpassed the 30,000 mark for the first time in five months on Tuesday morning as Prime Minister Yoshihide Suga's resignation announcement continued to fuel investor optimism.

The benchmark index was up 1.3% at one point in morning trade and is on course to advance for a seventh consecutive trading session. The broader Topix index also continued to climb, hitting its highest intraday level since August 1990, when the asset bubble burst in Japan.

Suga announced last week that he would not run in the Liberal Democratic Party's leadership election slated for later this month. The prime minister has struggled with falling approval ratings over his government's handling of the coronavirus pandemic, and markets are optimistic that his stepping aside will pave the way for stronger leadership that is better able to tackle the coronavirus pandemic.

Investors also believe that having someone other than Suga as prime minister will increase the business-friendly LDP's chances in the upcoming general election, which must be held by Nov. 28

Contenders to replace Suga are expected to unveil generous economic stimulus packages.

Shares were up across a range of industries, including exporters, electronics, nonferrous metals and pharmaceuticals. Toyota Motor rose about 1% to reach its highest intraday price in a month, while shares in SoftBank Group were up more than 5%.

Despite steady corporate earnings, Japanese stocks have underperformed their U.S. and European peers in recent months, due mainly to the market's lack of big tech stocks and Japan's struggle to contain a surge in COVID-19 infections. This has left Japanese stocks plenty of room to rise.

Ryota Sakagami, a chief equity strategist at J.P. Morgan Securities Japan, points out that Japanese equities "appear to be gradually exiting their more than six-month slump from a [year-to-date] peak on Feb. 16."

In addition to the prospect of greater political stability with Suga's resignation, Sakagami believes there are three major tail winds for the Tokyo market: "a rise in U.S. long-term interest rates, growing expectations for domestic economic reopening and increased news flow on drugs used to treat COVID-19."

But while a growing number of market participants are turning bullish on Japanese stocks and expect a possible year-end rally, some are concerned about the market's volatility. Since its low in mid-August, the Nikkei index has soared by around 10% in less than three weeks.