Market confidence remained upbeat for a second consecutive session amid hopes that diplomatic efforts could help restore stability to global energy supplies following weeks of uncertainty caused by the Middle East conflict. Despite this optimism, oil prices still recorded gains during the day.
US Secretary of State Marco Rubio said discussions aimed at ending the conflict could make progress, adding that Pakistani mediators might assist in securing an agreement.
Rubio told reporters that Pakistani representatives were expected to travel to Tehran, expressing hope that the move would help push negotiations forward.
Meanwhile, Donald Trump cautioned on Wednesday that the negotiations were at a critical stage, balanced between reaching a deal and the possibility of renewed military action.
Trump stated that if satisfactory outcomes were not achieved, developments could escalate rapidly, adding that preparations were already in place.
A ceasefire reached on April 8 brought an end to weeks of fighting involving the US-Israel alliance and Iran. However, a permanent peace agreement has yet to materialise, leaving financial markets highly sensitive to every new development.
Iran said it was examining proposals from the United States while warning that any fresh attack would be met with a strong response, as both sides continued discussions amid concerns of further escalation.
One of the major unresolved issues remains the Strait of Hormuz, which continues to remain effectively shut despite the ceasefire. The strategic passage normally handles around one-fifth of global energy transportation.
Across Asia, Tokyo emerged as the top performer, with the Nikkei surging more than 2%.
Taipei gained close to 1.5%, while markets in Hong Kong, Shanghai, Sydney, Seoul, Wellington, Jakarta, Bangkok, Manila, Singapore, and Kuala Lumpur also traded in positive territory.
The regional rally followed a cautiously optimistic session on Wall Street, where US equities ended slightly higher.
Investor attention also shifted to South Korea, where unionised employees at Samsung Electronics were set to vote on Friday regarding a tentative wage agreement that helped prevent a large-scale strike.
Samsung and its labour union reached a provisional deal late Wednesday after last-minute talks mediated by the government, avoiding an 18-day strike that had been scheduled to begin on Thursday.