Asian markets hit six-week high as US–Iran peace hopes lift risk sentiment

Asian equities climbed to a six-week high on Wednesday, tracking overnight gains on Wall Street, as renewed hopes of US–Iran peace talks eased oil prices and boosted investor appetite for riskier assets.

Markets drew support after Donald Trump indicated that negotiations with Iran could resume in Pakistan within days, following the collapse of earlier talks and subsequent escalation that saw Washington impose a blockade on Iranian ports. Officials from Pakistan and Iran have also signalled readiness to restart discussions, raising expectations that diplomacy could still defuse the conflict.

The prospect of renewed engagement helped calm nerves across financial markets, pushing benchmark crude prices lower and lifting equities. Brent crude futures slipped 0.7 per cent to $94.13 a barrel after tumbling nearly 5 per cent in the previous session, reinforcing the view that supply disruptions may be temporary.

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Investor optimism was reflected across regional bourses. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5 per cent to its highest level in six weeks. Japan’s Nikkei 225 gained 1.2 per cent to 58,561 points, moving closer to its late-February record peak.

In China, blue-chip stocks advanced 0.5 per cent, while Hong Kong’s Hang Seng Index climbed 1.2 per cent, underscoring the broad-based nature of the rally.

Wall Street set the tone overnight, with the S&P 500 closing near record highs and the Nasdaq Composite surging 2 per cent to mark its tenth consecutive day of gains. Softer-than-expected US producer price data for March also helped temper concerns about inflation driven by the conflict.

Bond markets echoed the improved sentiment. US Treasury yields edged lower, with the two-year yield slipping 1 basis point to 3.704 per cent after falling 3 basis points overnight, while the benchmark 10-year yield eased to 4.2439 per cent.

The US dollar steadied after a seven-day losing streak, as safe-haven demand receded. The euro held at $1.1791, close to a six-week high touched in the previous session.

Gold prices, another traditional safe-haven asset, edged up 0.1 per cent to $4,846 an ounce, reflecting a cautious undertone despite the broader risk rally.

Even as markets turned optimistic, risks remain elevated. Iran’s continued disruption of flows through the Strait of Hormuz — a critical artery for global energy supplies — continues to cast a shadow over the outlook.

The International Monetary Fund on Tuesday warned that the global economy could be pushed to the brink of recession if the conflict escalates further, underscoring the fragility of the current recovery.

With inputs from agencies.