Global markets have rallied overnight, as fears of further escalation in the US-Iran conflict subsided for now. Wall Street rose and the Australian share market followed that positive lead.
At the close of trade, the benchmark ASX 200 index was 0.8 per cent higher at 6,874.
Most blue chip stocks — such as three of the big four banks, BHP and Telstra — rose, while energy stocks lagged following a retreat in oil prices, with Brent crude falling as much as 4 per cent overnight.
During Australian and Asian trade yesterday, US stock market futures fell sharply, as Iran launched missile strikes on Iraqi bases housing US troops.
Stocks across the region fell, before recovering some of the losses after US President Donald Trump did not deliver an immediate response and tweeted "all is well".
US futures recovered and Wall Street rose strongly during the session, with the S&P 500 and the Nasdaq hitting fresh record highs, before paring gains into the close.
Shares in Boeing lost more than 1 per cent, after one of its planes crashed shortly after take-off from Tehran, killing all 176 people on board.
In European trade, stocks rebounded from early losses.
Airlines reroute flights in Middle East
The oil price pullback will be good news for the fuel costs of global airlines, if it lasts, however, higher fuel bills may still be in store.
Qantas, along with international airlines including Germany's Lufthansa, Air France, Singapore Airlines and Malaysia Airlines have rerouted flights to avoid airspace over Iran and Iraq, due to the tensions with the US.
Airline analysts have told Reuters the longer journey times will increase fuel usage, throw off schedules and add to operating costs.
On Wednesday, Qantas said its Perth to London flight would have an increased flying time of 40 to 50 minutes due to its redirected flight path, and passenger numbers would need to be reduced in order to carry more fuel.
