Japanese stocks experienced a significant rally on Thursday as the yen continued to weaken, following comments from new Prime Minister Shigeru Ishiba that soothed fears regarding potential interest rate hikes. Meanwhile, Hong Kong's stock market took a downturn for the first time in over a week after an impressive surge motivated by economic stimulus from China.

Investor sentiment is tinged with caution as concerns rise over regional tensions, particularly in light of Iran's recent missile assault on Israel. The geopolitical landscape has sent oil prices climbing, with markets closely monitoring the situation.

The Nikkei index in Tokyo climbed notably on the heels of Ishiba's statement during a meeting with Bank of Japan (BoJ) Governor Kazuo Ueda, wherein he indicated that the current economic climate does not warrant further interest rate increases. His remarks appear to have quelled expectations for a possible third rate hike this year.

"I don’t think we are in the environment for further rate hikes," Ishiba asserted to the media, emphasizing his commitment to sustaining economic growth and a gradual move towards ending deflation.

Japan's central bank had previously raised interest rates in March for the first time in 17 years, a move that sparked market volatility. However, Ishiba's reassurances drove the yen down to 147.24 against the dollar, its weakest point since August. This depreciation of the currency benefited exporters listed on the stock exchange, propelling the Nikkei up over 2%.

In contrast, Hong Kong's Hang Seng Index fell more than 3% as traders engaged in profit-taking after a remarkable run-up that saw gains exceeding 20% following the announcement of Chinese economic stimulus measures targeted at the struggling property sector.

BNP Paribas’ Jason Lui noted an increase in market participation and turnover compared to earlier this year, suggesting a shift in investor dynamics in the China-Asia markets after a prolonged period of depressed trading activity.

Elsewhere in Asia, major markets such as Sydney, Singapore, Wellington, Manila, and Jakarta saw positive gains. Meanwhile, rising oil prices – about 1% – further complicate the economic outlook as tensions heighten with Israel’s military operations following Iran’s missile threats.

As investors grapple with uncertainty, Wall Street offered a lukewarm lead despite the release of better-than-expected job growth figures in the private sector, casting a spotlight on the upcoming non-farm payrolls report that could influence Federal Reserve deliberations on potential rate cuts.

Key market indices as of 02:30 GMT reflect these developments: - **Tokyo Nikkei 225:** Up 2.2% at 38,655.03 - **Hong Kong Hang Seng Index:** Down 3.3% at 21,709.85 - **Dollar/Yen Exchange Rate:** Up at 146.90 Yen from 146.38 - **Crude Oil Prices:** West Texas Intermediate up 1.1% at $70.88, Brent North Sea Crude up 1% at $74.62

As the global economy continues to face challenges and opportunities, all eyes remain on the unfolding geopolitical scenarios and their impact on market stability.