The Japanese stock market hit the highest closing level since August 15, 1990, on Tuesday. The benchmark Nikkei index rose as hopes grew for direct payments under a new US Covid-19 relief package to be expanded to $2,000 per household from $600.

The 225-issue Nikkei Stock Average gained 714.12 points, or 2.66 per cent, from Monday to close the day at 27,568.15, marking its highest closing level since August 15, 1990.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 31.14 points, or 1.74 per cent, to finish at 1,819.18.

Air transportation, service and land transportation-oriented issues comprised those that gained the most by the close of play.

Asia stocks rise before central bank meetings, oil bounces
A woman walks past stock quotation board outside a brokerage in Tokyo, Japan, September 9, 2016. Reuters

"Investors who are buying stocks today are making new positions for 2021," Takashi Hiroki, chief strategist at Monex Securities, said.

The Asian rise was boosted by the overnight spike in the Wall Street, where indexes notched record highs as optimism for an economic recovery increased following U.S. President Donald Trump's signing of a $2.3 trillion pandemic aid bill.

The investors also re-recognised other catalysts from this month, such as dovish monetary policies from central banks in Japan, the U.S. and Europe, as well as a string of positive vaccine news, said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management.

"While the speed will not likely be as fast as the one in the November rally, I think there is enough possibility that the market will remain strong for the next one to two months," he told Reuters.