(April 14): Asian stocks advanced on Tuesday as interest in artificial intelligence (AI) shares resurfaced, with Middle East tensions appearing to ease after US President Donald Trump raised hopes for talks with Iran. Oil fell.

MSCI’s Asia-Pacific equity index rose 1.6% on optimism that an easing of the conflict will lower oil prices and support economic growth. Technology stocks led the gains with Taiwan’s Taiex Index rising to a record as investors returned to the AI theme — seen as less impacted by the war in Iran. South Korea, a poster child for AI investments, surged 3.1% as sentiment improved with the S&P 500 Index erasing all losses triggered by the Iran conflict.

Helping sentiment, Brent crude fell 1.5% to US$97.85 (RM387.24) a barrel on signs Washington and Tehran may revive peace talks following the start of a US blockade of the Strait of Hormuz. The dollar inched lower, extending its losses into a seventh day and putting it on track for its longest losing streak since March 2024. Treasuries edged higher across the curve as lower oil prices eased inflation concerns.

Market sentiment is improving, with the MSCI All Country World Index rising for an eighth straight day, after Trump signalled a willingness to resume talks and said Iran had reached out to his administration. Even as the US began a naval blockade of the Strait of Hormuz — a key artery for crude oil flows from the Middle East — traders remained cautiously optimistic that last week’s ceasefire-driven rally can hold.

“As the Iran deal hopes improve, markets will refocus on earnings growth and AI,” said Ritesh Ganeriwal, the head of investment at Syfe Pte Ltd in Singapore. “Markets are reacting to the path to peace, not the conflict itself. As soon as there was a credible de-escalation, markets looked through the risk.”

Meanwhile, the US blockade of the Strait of Hormuz took effect, marking Trump’s latest attempt to pressure Iran to loosen its grip on the waterway, a chokepoint through which about a fifth of global oil and liquefied natural gas flows. Since the US action, at least two tankers appear to have abandoned planned transits after a military deadline to exit Iranian waters passed, underscoring the growing disruption to shipping.

In other corners of the market, Treasuries rose across the curve with the yield on the 10-year falling one basis point to 4.28% as cheaper oil helps contain inflation. Gold rebounded after two days of losses to trade around US$4,775 an ounce, while bitcoin rose to about US$74,300.

Elsewhere, the Singapore dollar erased its gains after the country’s central bank tightened its monetary policy settings.

MSCI’s gauge for technology shares in Asia-Pacific jumped 3.1% with companies such as Kioxia Holdings Corp surging 15%. 

“The markets really want to give peace a chance, accentuating the positives and downplaying the negatives as tensions between the US and Iran simmer away,” said Kyle Rodda, an analyst at Capital.com Inc. “Despite this, the risk for further volatility remains high, with headline risk continuing to drive the action.”

In corporate news, the first-quarter earnings season got off to a mixed start. Goldman Sachs Group Inc shares slipped 1.9% after better-than-expected equity trading revenue failed to offset a miss in fixed-income, currency and commodities trading, marking a rough start to earnings season. 

Goldman’s earnings miss offered an early read on the financial health of corporate America. JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc are due to report on Tuesday as the Middle East conflict weighs on the outlook.

“Given the economic costs of higher oil prices and with the immediate turn of events highly uncertain, we think investors should avoid attempts to ‘trade’ geopolitics,” wrote Ulrike Hoffmann-Burchardi, who is the chief investment officer for Americas and global head of equities at UBS Global Wealth Management.

HSBC Holdings plc chief executive officer Georges Elhedery said the conflict in the Middle East and broader “uncertainties” are beginning to dent client confidence as investors navigate an increasingly volatile global landscape.

“We are saddened and concerned with what’s happening in the Middle East, and we are concerned not just with what’s happening, but also with how long this will take,” Elhedery said in an interview with Bloomberg Television at an HSBC conference in Hong Kong. “Unfortunately, some of these uncertainties have initially started to weigh on general confidence.” 

Some of the main moves in markets: