Asian equities started Thursday on a strong note, with South Korean and Japanese stocks leading regional gains as investors responded to easing geopolitical tensions in the Middle East and improving global market sentiment.
South Korea's Kospi climbed 5.24%, while Japan's Nikkei 225 gained 2.38% in early trading. Australia's ASX 200, however, edged 0.36% lower.
Markets drew support from signs that energy supply risks were receding after reports showed that at least 20 oil tankers carrying around 35 million barrels of crude had passed through the Strait of Hormuz following an agreement between the U.S. and Iran to reopen the key shipping lane. Investors are watching whether the reduction in geopolitical risks will help sustain the rebound in equities.
U.S. equity futures also indicated a firmer start. Nasdaq 100 futures rose 1.9%, S&P 500 futures added 0.5%, while futures linked to the Dow Jones Industrial Average were up 29 points.
The positive tone in futures followed a mixed overnight session on Wall Street. The Dow Jones Industrial Average gained 0.35%, but weakness in technology stocks pulled the S&P 500 down 0.10% and the Nasdaq Composite lower by 0.43%.
Crude prices continued to retreat as concerns over supply disruptions eased. Brent crude traded close to $73 a barrel after dropping 4.3% in the previous session, leaving it less than $1 above its closing level before the Middle East conflict began. U.S. West Texas Intermediate crude slipped below $70 a barrel. Market participants pointed to growing crude availability from Middle Eastern and African producers, which has increased supply in the physical market and reduced fears of shortages.
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