(Bloomberg) -- Japanese shares notched up gains on hopes for lower US interest rates, though they pared some of their earlier advance on political uncertainty at home after Prime Minister Fumio Kishida said he will not run for a second term.

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The Topix rose 1.1%, helped by strong moves in value stocks such as bank shares. It earlier rose as much as 1.8%. The Nikkei 225 Stock Average closed 0.6% higher after gaining 1.3%.

The stock market gyrated in a knee-jerk response to the news of Kishida, along with the yen and Japanese bond yields. While his departure was not a total surprise given his low approval ratings, the reaction was varied as investors are unsure who will replace him when his term as the head of the ruling Liberal Democratic Party ends next month.

“Since public approval rating for Kishida’s cabinet had been at a low level, there may be expectations that the change at the top will increase confidence and improve the ability to carry out policies,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan. But “uncertainty over possible policy changes may weigh on the market in the short-term.”

Read: Kishida’s Exit Clears Path for Higher BOJ Rates, Strategists Say

The market also took a cue from softer-than-expected US wholesale price data on Tuesday, which boosted expectations that the Federal Reserve will cut interest rates next month. The outlook of US economy is seen as far more important than the Japanese political outlook, as most investors do not see radical policy changes under new leadership. US consumer prices will be released today.

“I don’t think Kishida’s departure will have a big impact on markets,” said Shinichi Ichikawa, a senior fellow at Pictet Asset Management.

High-beta stocks, such as insurers and carmakers led the gains. Yuya Fukue, trader at Rheos Capital Works, said that made some market participants think pension funds are buying them to rebuild their stock positions after a recent selloff.

The Topix reached a 50% Fibonacci retracement of its 24% plunge from its July peak to Aug. 5 trough, encouraging some profit taking, said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory.

--With assistance from Toshiro Hasegawa.

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