Japan's equity markets rallied sharply on Wednesday, ending a four-session losing streak as hopes grew for a possible easing of tensions in the Middle East. The Nikkei 225 jumped 5.2% to close at 53,740, while the broader Topix surged 5% to 3,671.

Investor sentiment improved after Donald Trump said the US could halt military operations in Iran within two to three weeks and suggested a formal agreement may not be necessary to end the conflict. However, uncertainty persisted as Abbas Araghchi rejected a ceasefire, calling instead for a complete end to the war along with guarantees and compensation.

On the domestic front, the Bank of Japan's quarterly Tankan survey showed that business sentiment among large manufacturers improved in the three months to March, indicating that rising geopolitical risks have not yet significantly impacted corporate confidence.

Gains were broad-based across sectors, with technology stocks leading the rally. Chip and AI-related companies performed strongly, with Advantest jumping 10.7%, SoftBank Group rising 5.9%, and Tokyo Electron gaining 5.5%.