Australia's share market is trading at four-week highs as investors mull a looming Iran war deadline and escalating threats from US President Donald Trump.
The S&P/ASX200 rose 118.6 points by midday on Tuesday, up 1.38 per cent, to 8,698.1, as the broader All Ordinaries gained 117.6 points, or 1.34 per cent, to 8,894.3.
The move followed a strong lead from Wall Street, despite the United States and Iran remaining at loggerheads over a potential ceasefire deal after the latter was attacked by the US and Israel in late February.
Iran has called for a permanent end to hostilities and sanctions relief, while Mr Trump has demanded free passage for shipping through the Strait of Hormuz.
He has threatened to attack civilian infrastructure if the strait isn't opened by Wednesday at 10am AEST.
Markets in Australia and other jurisdictions are facing a key crossroad, Capital.com senior market analyst Kyle Rodda said.
"Either the attacks happen, marking a possibly catastrophic escalation where regional energy assets and civilian infrastructure across the gulf is considered fair game," he said.
In such an instance, the energy sector would surge, pushing the US dollar and global debt yields higher, weighing on equities and non-yielding assets like gold.
"Or there's a backdown. Even better, a ceasefire and the markets stage an epic relief rally, where a plunge in oil takes yields and the US dollar with it, and equities and gold rip," Mr Rodda said.
On the local bourse, basic materials stocks had charged more than two per cent higher by midday, tracking with similar gains for mega miners BHP and Rio Tinto.
Gold producers also improved, despite the precious metal easing over the past few sessions to $US4,642 ($A6,720) an ounce.
Financials also helped lift the bourse with a 1.7 per cent advance, bolstered by strong performances from the big four banks and Macquarie.
CommBank shares jumped 2.3 per cent to $176.77, while NAB played catch-up after coming under selling pressure in recent weeks to jump almost three per cent in two sessions.
Bank of Queensland shares surged 5.4 per cent to five-month highs of $7.17 after the company struck a strategic capital partnership with Challenger.
ASX-listed IT stocks outperformed, up 4.2 per cent and tracking with a strong lead from US tech stocks overnight.
Data centre play NextDC was a stand-out, rocketing more than 12 per cent higher after securing a $1 billion wholesale offer of subordinated hybrid securities, backed by Quebec-based investment group La Caisse.
Consumer discretionary stocks also found tailwinds, lifting 1.7 per cent with strong leads from Wesfarmers, Aristocrat and Light & Wonder.
The market value of Mexican-themed fast food restaurant Guzman Y Gomez swelled by a fifth in early trade on the back of strong quarterly sales, offering some relief for investors who've watched the stock price slip for more than 13 months.
Health-care stocks improved, supported by a rally in giant CSL, which gained 1.9 per cent to $141.50 after noting most of its products won't be impacted by the latest round of US tariffs on pharmaceuticals.
Zooming out, equity markets appear to be entering a less certain period marked by sticky inflation and uneven growth, VanEck Asia Pacific chief executive and managing director Arian Neiron said.
"Stagflation appears as the base case, a Goldilocks scenario of low inflation and high growth is not on the cards, with the best case being an awkward middle in which growth is uneven and conviction is low,” he said.
"Global markets are beginning to look more like a game of Jenga, with the tower increasingly unstable as more supports are removed rather than reinforced."
The Australian dollar was buying 69.02 US cents, up from 68.68 US cents on Friday at 5pm.
