Asian markets opened Thursday with a powerful relief bid, as investors leaned into hopes that tensions in the Middle East may ease enough to keep the Strait of Hormuz open.
Japan set the tone, with the Nikkei 225 vaulting through 62,000 for the first time, while broader regional equities also pushed higher.
But the mood was not euphoric as oil still held above $100 a barrel, and traders kept one eye on the next headline out of the Gulf.
Japan leads the charge
Tokyo was the clear leader of the session as Nikkei returned from a long holiday and crossed 62,000 for the first time, catching up with a sharp AI-led earnings rally.
The benchmark index traded at 62,243.88, up 4.6%, underscoring the scale of the move.
The Topix also advanced strongly, while the yen stayed in focus after its recent bouts of volatility.
Asia-Pacific equities outside Japan also reached fresh record highs, highlighting the depth of the rally’s spread throughout the region.
However, traders continued to monitor the yen closely, as currency volatility remains an important signal for global investors’ positioning in Japanese assets.
For now, the Japanese market is being read as both a catch-up trade and a continuation of the broader risk-on story that has carried tech and earnings-linked names higher.
Relief trade, but not a blanket rally
The rest of Asia was firmer, but the gains were selective rather than indiscriminate.
Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 gained around 1.5%, while South Korea’s Kospi underperformed after a strong prior run.
The Kospi fell 0.68%, while the small-cap Kosdaq slipped 0.56% as traders locked in profits in technology and growth stocks.
The softer performance in Seoul highlighted that the regional rally is still selective and dependent on sector positioning, rather than a full-scale surge in risk appetite.
MSCI’s index of Asia-Pacific shares outside Japan rose 1% to another all-time high.
That mix matters as investors seem willing to buy the de-escalation story, but they are not yet treating it as a clean, permanent resolution.
The market is still trading with a geopolitical discount attached.
Oil, yields and the next headline risk
Energy remains the market’s main tension point.
Brent crude was at $102.29 a barrel in early Asian trading and US crude at $96.28, around 40% above where it was at the start of the conflict.
That is enough to keep inflation concerns alive and to limit how far equities can run on optimism alone.
The Strait of Hormuz remained unresolved, and 10-year Treasury yields were still elevated versus pre-conflict levels, a reminder that the bond and oil markets are still signaling caution even as stocks celebrate the possibility of peace.
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