Asian stocks climb on tech boost as Iran tensions and Fed outlook weigh on sentiment

Asian stock markets advanced on Thursday, lifted by gains in U.S. technology heavyweights, while geopolitical tensions involving Iran and uncertainty over U.S. interest rates kept investors cautious.

Trading volumes were thinner across the region as markets in Hong Kong, China and Taiwan remained closed for the Lunar New Year holiday. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, while Japan’s Nikkei 225 gained 0.85 percent, led by technology stocks. South Korea’s Kospi surged nearly 3 percent to a record high.

The upbeat tone followed a rally in U.S. tech stocks after chipmaker Nvidia announced a multiyear agreement to supply millions of artificial intelligence chips to Meta Platforms. The deal boosted sentiment around the sector, which had experienced a sharp selloff earlier this month.

Futures for the Nasdaq and S&P 500 edged slightly higher, while EUROSTOXX 50 futures dipped 0.15 percent.

Geopolitical risks also remained in focus. Oil prices held on to strong gains from the previous session, when concerns about a potential conflict between the United States and Iran sparked fears of supply disruptions. Brent crude slipped marginally to $70.31 a barrel after a 4.35 percent jump, while U.S. crude traded at $65.10, maintaining most of Wednesday’s 4.6 percent surge.

Despite the slight pullback in oil, gold continued to attract safe-haven demand and steadied at $4,963.99 an ounce.

In currency markets, the dollar remained firm after minutes from the latest Federal Reserve meeting showed policymakers were in no rush to cut rates and left open the possibility of further tightening if inflation remains elevated.

Sterling fell close to a one-month low at $1.3488 against the dollar, while the yen hovered near 155 per dollar, last trading at 154.80. The euro stayed under pressure below $1.18, weighed down by reports that European Central Bank President Christine Lagarde plans to step down early.

Elsewhere, the New Zealand dollar edged up 0.11 percent to $0.5972 after tumbling 1.4 percent in the previous session, when the country’s central bank dampened expectations of a more hawkish policy shift.

Overall, while strong tech earnings and corporate deals supported equities, investors remained alert to geopolitical tensions and signals from central banks that interest rates may stay higher for longer.