HONG KONG: Tokyo's Nikkei index soared Thursday to lead another strong rally across Asia stocks, fueled by growing optimism the Iran war is close to ending and the revival of demand for all things AI.
Oil prices also held the week's steep losses due to hopes Washington and Tehran will conclude the conflict and reopen the Strait of Hormuz, which has been effectively closed since the start of March, choking off a fifth of the world's crude.
Risk sentiment got a huge boost Wednesday when President Donald Trump said an agreement was near, a day after he paused efforts to help stranded ships through Hormuz, which drew Iranian attacks and threatened their fragile ceasefire.
If "Iran agrees to give what has been agreed to" the war would be over, the US president said. But if not, the bombing would resume "at a much higher level and intensity".
He later told reporters: "We've had very good talks over the last 24 hours, and it's very possible that we'll make a deal."
US news outlet Axios cited two US officials as saying both sides were close to agreement on a one-page memorandum of understanding to end the war, open the strait and set a framework for more detailed nuclear talks.
Iran has yet to respond to the US offer, with foreign ministry spokesman Esmaeil Baqaei telling local media it was "still under review".
Parliament speaker, Mohammad Bagher Ghalibaf, who has taken the lead in negotiations, warned Washington trying to "force us to surrender".
Oil prices were flat Thursday, having fallen around 10% over the previous two days.
Investors, who have largely remained optimistic that a deal can be reached, tracked another record day on Wall Street and pushed Asian markets higher.
The gains have also been helped by a fresh wave of cash back into the tech sector as traders snap up all things AI, helped by standout earnings from US giants including Microsoft, Apple and Alphabet.
Tokyo's Nikkei soared more than 5% as investors there returned from a long holiday, with tech investment titan SoftBank rocketing more than 15% while chip-linked firms Tokyo Electron and Advantest also ratcheted up big gains.
Seoul extended Wednesday's surge that took it past 7,000 points for the first time, with Samsung also up following its meteoric rise to pass the $1 trillion market capitalization mark.
Hong Kong, Shanghai, Sydney, Singapore, Taipei, Wellington, Manila and Jakarta also clocked up big gains.
The prospect of cheaper oil prices tempered worries about inflation, which also helped gold rally more than 3% Wednesday.
Stephen Innes at SPI Asset Management said "traders aggressively embraced the idea that the Iran war may finally be shifting from missile trajectories to negotiation tables, while the AI frenzy simultaneously poured jet fuel onto the risk rally".
"The result was one of those rare sessions where nearly every macro domino fell in perfect sequence. Oil collapsed, bonds rallied, the dollar sank, gold exploded higher", and stocks surged.
Investors in Tokyo were also closely watching the yen after speculation of intervention by the Japanese government to prop up the beleaguered currency.
The unit, which has been hit by surging oil prices and a rush to the safe-haven dollar, hit a 10-month high against the greenback Wednesday, in the latest of a series of spikes in recent days that have fueled rumors that officials have provided support.
The government spent $32-$38 billion buying yen in the market last Thursday, local media reported, quoting Bank of Japan data.
Atsushi Mimura, Japan's top currency official, on Thursday declined to comment, local media reported.
Key figures at around 0230 GMT
Tokyo - Nikkei 225: UP 5.7 percent at 62,915.87 (break)
Hong Kong - Hang Seng Index: UP 1.5 percent at 26,598.50
Shanghai - Composite: UP 0.2 percent at 4,167.62
West Texas Intermediate: FLAT at $95.08 a barrel
Brent North Sea Crude: UP 0.1 percent at $101.32 a barrel
Dollar/yen: DOWN at 156.23 yen from 156.39 yen on Wednesday
Euro/dollar: UP at $1.1756 from $1.1752
Pound/dollar: UP at $1.3600 from $1.3594
Euro/pound: DOWN at 86.42 pence from 86.45 pence
