MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.9%, marking a third straight day of gains, while Japan’s Nikkei 225 surged 2.2% to a fresh peak. U.S. equity futures also pointed higher, with S&P 500 e-mini contracts up 0.2%.

The gains followed a strong session on Wall Street, where the S&P 500 rose 0.8% and the Nasdaq Composite advanced 1.6%, supported by robust earnings from Bank of America and Morgan Stanley. With roughly 6% of companies having reported results so far, about 84% have exceeded analysts’ expectations.

Analysts at Goldman Sachs said they remained constructive on emerging market equities, citing expectations of solid profit growth driven in part by demand linked to artificial intelligence, which they said could remain relatively insulated from energy market shocks.

Attention in Asia is also turning to earnings from Taiwan Semiconductor Manufacturing Co, a key supplier in the global semiconductor industry, with forecasts pointing to a sharp rise in quarterly profit on strong demand for advanced chips.

In currency markets, the U.S. dollar index was little changed at 98.02, as easing geopolitical tensions tempered safe-haven demand and investors adjusted expectations for monetary policy easing by the Federal Reserve. The euro hovered near its highest level since the Iran conflict began, extending a multi-day rally.

Oil prices edged higher, with Brent crude rising 0.3% to $95.23 per barrel, after indications that Iran could allow safer maritime passage through the Strait of Hormuz as part of ongoing negotiations with the United States. Supply concerns were also heightened by a refinery fire in Australia.

Chinese equities gained after data showed the economy expanded 5.0% year-on-year in the first quarter, exceeding expectations and suggesting resilience despite geopolitical headwinds. Analysts cautioned, however, that prolonged conflict could weigh on global demand and exports.

Australian markets were more subdued, with shares slightly lower and the currency steady after employment data showed stable labor market conditions, reinforcing expectations that inflation risks remain a key concern for policymakers at the Reserve Bank of Australia.

Gold rose 0.6% as investors balanced improving risk sentiment with lingering uncertainty, while major cryptocurrencies edged lower in cautious trading.

The move came as markets reacted to continuing uncertainty surrounding the regional conflict, with Iran warning that Washington would “bitterly regret” the sinking of an Iranian warship off Sri Lanka.The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, was last up 0.11% at 98.91 in trading across European and Asian markets.Safe-haven demand returnsThe dollar’s advance reflects renewed investor caution as geopolitical risks intensify across the Middle East. Market participants had briefly hoped for signs of de-escalation earlier this week, but those expectations faded after fresh developments raised the prospect of a broader conflict.Heightened geopolitical uncertainty often leads investors to move capital into assets perceived as safer during periods of volatility, including the U.S. dollar and government bonds.Currency markets have reacted quickly to developments linked to the conflict, with traders adjusting positions in response to each new headline.

Markets react to geopolitical uncertaintyAnalysts said the unpredictable nature of the situation has made investors particularly sensitive to news related to the conflict.“Everyone is fumbling around in the dark,” said Nick Rees, head of macro research at Monex.“Most investors recognise that they do not have a high level of confidence when it comes to the outlook over these tensions, and it is leaving markets highly reactive to even small headline developments,” Rees said.The cautious sentiment has contributed to fluctuations across global currency markets, with traders seeking clarity about how the conflict could evolve and affect broader financial conditions.

Geopolitics drives currency movesThe dollar had recently climbed to three-month highs as geopolitical tensions intensified, reflecting sustained demand for the currency during periods of global uncertainty.Investors continue to monitor developments in the Middle East closely, particularly signals that could influence energy markets and global economic stability.Currency traders said that ongoing geopolitical risks and shifting market expectations are likely to keep exchange-rate movements volatile as investors respond to developments in the conflict and assess the broader implications for global financial markets.