Asian equities extended their first weekly gain since the outbreak of the Middle East conflict, as investors cautiously positioned ahead of upcoming diplomatic talks between the United States and Iran.
The MSCI Asia Pacific Index rose 0.8%, supported by improving sentiment after former U.S. President Donald Trump expressed optimism about a potential agreement with Iran, despite continuing tensions over maritime fees in the Strait of Hormuz.
Technology shares led gains across the region, with South Korean equities—often viewed as a key indicator of global artificial intelligence investment trends—rising 1.7%. Investors increasingly favoured tech stocks, which are seen as less exposed to geopolitical risks tied to the conflict.
Global markets also reflected improving risk appetite, with U.S. equity-index futures recovering from earlier losses, while European futures pointed to a positive opening.
Crude oil prices, however, remained under pressure. Brent crude trimmed earlier gains to trade around $96.53 per barrel and was on track for its biggest weekly decline in nine months, as expectations of a diplomatic breakthrough weighed on supply-risk premiums.
The U.S. dollar also weakened, heading for its largest weekly drop since January, as investors rotated away from traditional safe-haven assets amid easing geopolitical fears.
Traders remain focused on the fragile ceasefire environment and the planned U.S.–Iran negotiations set to begin in Islamabad this weekend, which are expected to shape near-term market direction.
Market analysts say sentiment remains highly sensitive, with any breakdown in talks likely to trigger renewed volatility across oil, currency, and equity markets.
