Stocks rise as oil slides on Middle East diplomacy hopes

Investors witnessed a modest rise in Asian stocks on Wednesday as oil prices continued to drop amid growing hopes of Middle East diplomatic progress, while traders kept a close eye on Nvidia's earnings and U.S. inflation data. Brent crude prices plunged nearly 8% this week following Iran and Oman's potential progress in reopening the Strait of Hormuz.

U.S. Treasury Secretary Scott Bessent announced an "economic D-Day" campaign against Iran and its partners, but analysts noted the measures were milder than initially anticipated. Positive overtures between Pakistan and Iran, as reported by Pakistani mediators, were seen as contributing to the market optimism. Brent crude prices fell around 2%, falling below $90 a barrel.

This easing of oil prices helped to alleviate market pressure stemming from last week's sharp rise, which had raised inflation concerns and pushed U.S. long-dated Treasury yields to their highest levels in over a decade. The optimistic market sentiment and lower borrowing costs fueled gains in equities across Tokyo, Hong Kong, Shanghai, Seoul, Wellington, Taipei, Mumbai, Bangkok, and Jakarta.

However, Sydney, Singapore, and Manila saw declines. London and Paris opened slightly higher, while Frankfurt saw a slight dip. The week's primary focus will be Nvidia's second-quarter earnings report, which could significantly influence the market's perception of the AI boom's momentum.