Japan, South Korea stocks hit fresh records as markets weigh Iran tensions and ceasefire talks

Asia-Pacific markets rose on Wednesday, with Japan and South Korea’s benchmark indices hitting new highs as investors assessed recent U.S. military action in Iran, the fragile state of the Washington-Tehran ceasefire and optimism that a deal could still be reached.

Japan’sNikkei 225rose 1.49% to a fresh record high, while the Topix added 0.57%.

South Korea’s Kospi jumped 4.84% at the open, while the small-cap Kosdaq declined 0.68%.

In Australia, theS&P/ASX 200 was up 0.13%.

Hong Kong’sHang Seng indexfutures were last at 25,508, lower than the index’s last close of 25,599.45.

U.S. forces carried out what the Pentagon described as “self-defense” strikes in southern Iran early Tuesday, targeting missile launch sites and Iranian vessels allegedly attempting to deploy mines, even as Washington insisted it was still observing restraint under the ongoing ceasefire framework.

The military action highlighted the fragile truce between Washington and Tehran, with both sides continuing to test limits despite negotiations that the White House has described as nearing completion.

PresidentDonald Trumpsaid Monday that talks with Iran to end the war were “proceeding nicely.” That said, he did warn the U.S. could go on the offensive if negotiations break down.

Overnight on Wall Street, theS&P 500andNasdaq Compositerose to fresh intraday all-time highs on Tuesday, led by technology, as traders weighed the developments in the Middle East.

The broad market S&P 500 gained 0.61% and ended at 7,519.12, while the tech-heavy Nasdaq gained 1.19% to 26,656.18. Both indexes also closed at records. TheDow Jones Industrial Averagelost 118.02 points, or 0.23%, ending at 50,461.68. U.S. stock markets were closed Monday due to the Memorial Day holiday.

— CNBC’s Sean Conlon and Fred Imbert contributed to this report