Asian stocks rose at the start of Wednesday trading, benefiting from the recovery of US markets, while investors ignored rising oil prices, despite escalating tensions in the Middle East after the Houthi group threatened to open a new front in the widening conflict.

The broader MSCI index of Asia-Pacific shares outside Japan rose 1.2%, while South Korea's KOSPI jumped more than 6%. Japan's Nikkei 225 also rose 1.9%, while S&P 500 futures fell 0.1%.

Brent crude rose 0.6% to $91.55 a barrel, after two oil tankers carrying Saudi crude to Asia changed course in the Red Sea on Tuesday following threats of attacks from the Iran-aligned Houthi group in Yemen.

Westpac analysts wrote in a research note: 'Stock markets ignored geopolitical risks and instead focused on returns from the technology sector. After large losses in recent days, semiconductor stocks rebounded strongly.'

In Tuesday trading, the S&P 500 rose 0.9%, ending a three-session losing streak, supported by a recovery in chip stocks, after data showed South Korea's semiconductor exports nearly tripled in the first weeks of July, while Taiwan's export orders in June beat expectations.

Investors are awaiting earnings results from Alphabet, which faces increased scrutiny due to a delayed launch of a major model supporting its AI ambitions, as well as results from Tesla, which is widely expected to report its first quarterly cash burn in over two years, as spending on AI and robotics rises.

Investors are also watching developments in the pharmaceutical sector, after US President Donald Trump announced that all generic drugs imported into the United States would be subject to a zero percent tariff for two years starting August 1, then rising to 100% for one year, and then to 200% thereafter.

The dollar index, which measures the greenback against a basket of six major currencies, steadied near a one-week high of 101.20. The dollar fell 0.1% against the yen to 163.06 yen, after hitting a four-decade high against the Japanese currency in the previous session.

The rise in oil prices, which ended Tuesday trading at a five-week high, did not significantly affect bond and currency markets, as markets awaited central bank meetings next week.

A Reuters poll showed the Federal Reserve will keep interest rates unchanged until the end of 2026, although economists see a high probability of a rate hike.

US interest rate futures also indicated that one rate hike by December remains the most likely scenario, while the chances of a 50 basis point or more hike by year-end appear balanced.

The yield on the 10-year US Treasury note rose 0.2 basis points to 4.628%.

In metals markets, gold rose 0.5% to $4,097.67 an ounce.

In the cryptocurrency market, Bitcoin rose 0.3% to $66,611.73, while Ether climbed 0.7% to $1,936.18.