In early trading on Wednesday, most Asian equity markets posted gains, as investors closely monitored diplomatic negotiations aimed at reopening the Strait of Hormuz — a critical global shipping chokepoint that remains largely closed following the outbreak of war in Iran.
Global enthusiasm around artificial innovation continued to lift a number of regional technology stocks, while sliding crude oil prices injected fresh optimism into major oil-importing economies including Japan, which relies on foreign purchases for nearly 100% of its energy needs. Japan’s benchmark Nikkei 225 climbed 0.6% to 66,227.55 during morning session trading. Meanwhile, South Korea’s Kospi outperformed regional peers with a 1.6% jump to 6,849.92, Hong Kong’s Hang Seng gained 0.8% to 25,712.29, and China’s Shanghai Composite posted a modest 0.7% rise to 3,917.04. Australia’s S&P/ASX 200 was the only major index to trend downward, dipping 0.2% to 9,142.60.
Oil prices extended their downward trend through early Wednesday, with benchmark U.S. crude falling $2.06 to settle at $80.30 per barrel. International benchmark Brent crude dropped $2.31 to $86.27 a barrel. Brent saw extreme volatility last month, swinging between $72 and $102 per barrel as investor hopes for a U.S.-Iran negotiated deal rose and fell amid escalating tensions. Tensions between Washington and Tehran climbed higher recently after the Trump administration unveiled a new round of economic sanctions designed to further pressure Iran’s struggling economy.
Diplomatic efforts to de-escalate conflict and reopen the strategic waterway gained momentum this week. Top diplomats from Iran and Oman met Tuesday to discuss a phased plan for restoring commercial ship traffic through the strait. The talks followed a recent attack that left an oil tanker disabled off the coast of Oman, a stark reminder of the persistent safety risks facing shipping operators that attempt to traverse the waterway while it remains under Iranian control. In a parallel diplomatic push, a Pakistani delegation held discussions with Iran’s president to restart negotiations aimed at ending the U.S.-Iran conflict. Pakistan’s Interior Minister Mohsin Naqvi described the meeting with Iranian President Masoud Pezeshkian as “very positive and productive,” per comments shared by the Pakistani military.
Beyond energy and geopolitics, the global AI sector remained a key driver of market momentum. On U.S. markets, chipmaker Nvidia — one of the biggest beneficiaries of the AI boom, which is scheduled to release its latest quarterly earnings report Wednesday — led gains with a 2.2% rise. The uptick came one day after a 2.9% drop for the stock, which had been the largest drag on the S&P 500 in the prior session.
Eric Schiffer, CEO of the Los Angeles-based investment firm Patriarch Organization, argued that long-term demand for AI technology will continue to grow despite near-term market fluctuations, as both private companies and governments view AI investment as a non-negotiable requirement to maintain global competitiveness. “There’s a lot of fear about AI. Those fears are based on the financing side, meaning that there is so much money that needs to be raised. What it’s underrating, in my opinion, is the fact that this technology is so incredible,” Schiffer said. AI stocks have seen sharp volatility through the summer, as investors weigh concerns that valuations have risen too quickly and that the AI boom may prove unsustainable over the long term.
U.S. bond markets also saw movement this week, with the yield on 10-year Treasury notes falling to 4.63%, down from 4.70% on Monday and 4.74% at the end of last week. While this represents a notable shift for the bond market, the 10-year yield remains well above the 3.97% level recorded before the Iran war sent oil prices and inflation concerns soaring. By the close of trading, the S&P 500 gained 24.42 points to reach 7,677.28, the Dow Jones Industrial Average added 160.24 points to hit 53,577.40, and the Nasdaq composite climbed 171.11 points to 26,151.30.
In foreign exchange markets, the U.S. dollar edged slightly lower against the Japanese yen, falling to 159.02 yen from 159.20 yen in the prior session. The euro also slipped modestly, trading at $1.1669 compared to $1.1675 at the previous close.