The S&P/ASX200 rose 15.2 points by midday, up 0.17 per cent, to 8,985.7, as the broader All Ordinaries gained 23.7 points, or 0.26 per cent, to 9,188.8.
The uptick followed a strong lead from Wall Street overnight, on reports the US and Iran could resume peace talks this week and as more than 20 approved commercial ships made their way through the Strait of Hormuz in 24 hours.
"The overnight rally in equities, of course, driven by a plunge in oil prices, was driven by news that fresh peace talks between the US and Iran are likely to go ahead as the countdown clock on the ceasefire continues to tick," Capital.com senior market analyst Kyle Rodda said.
"Reports suggest the US's blockade-of-the-blockade is holding up well and that means global oil markets remain heavily disrupted and the global economy hanging on the precipice."
Unsurprisingly, local energy stocks faced the biggest swing, down 2.3 per cent by midday, as Woodside and Santos tumbled, along with refinery operators Ampol and Viva Energy.
Coal producers also slipped, while uranium stocks Paladin Energy and Deep Yellow continued their recent advances.
Boss Energy bucked the trend for nuclear stocks, tumbling almost 12 per cent after cutting production guidance at its flagship Honeymoon Uranium project in South Australia.
Utilities also handed back some of their recent gains, the segment falling 1.7 per cent as AGL, Origin and APA Group lost ground.
Virgin Australia shares rallied more than six per cent after it maintained 2026 earnings guidance, the airline claiming its fuel hedging strategy will limit losses from spiralling jet fuel costs to between $30 million and $40 million for the period.
Both Qantas and Virgin have this week announced plans to reduce domestic flights and lift airfares to cushion the blow of surging fuel costs.
Australia's mining sector helped support the bourse, up 0.9 per cent as gold miners charged, with the precious metal trading near $US4,847 ($A6,800) an ounce, its highest price since mid-March.
Evolution Mining was the top-200's best performer, supported by the gold price and a strong quarterly report.
Mega miners BHP and Rio Tinto edged less than 0.2 per cent higher each, as iron ore futures hung near $US105 a tonne.
The heavyweight financials sector crept lower, tracking with weakness in the big four banks despite investment management firms lifting on the improved outlook.
Consumer discretionary stocks were roughly flat as heaviness in Bunnings owner Wesfarmers effectively cancelled out strong performances elsewhere in the segment.
IT stocks jumped more than two per cent, but the sector is still trading on par with November 2023 after six months of selling pressure.
In company news, Mesoblast surged more than seven per cent after securing an exclusive global license to a patented antigen receptor technology.
Nufarm rocketed higher after flagging up to $244 in underlying first half earnings, a 17 per cent improvement on the same half a year earlier.
The Australian dollar is buying 71.27 US cents, up from 70.96 US cents on Tuesday at 5pm as risk sentiment improved.
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