China’s economy grew 5.0% year-on-year in the first quarter, beating forecasts for a 4.8% expansion and improving from 4.5% in the previous quarter

Asian stocks extended sharp gains on Thursday, with Nikkei hitting a record high, as investors assessed China’s stronger-than-expected economic growth figures.

Nikkei 225 jumped 2.6% to its all-time high of 59,624.0 points, while the broader TOPIX index added 1.3%.

Gains were led by technology and chip-related stocks, as continued optimism around artificial intelligence demand boosted sentiment.

KOSPI also rose more than 2%, just short of breaching record highs hit earlier this year.

Straits Times Index edged 0.2% lower, while futures tied to Nifty 50 traded flat.

Investor sentiment in Asia was supported by upbeat economic data from China.

The world’s second-largest economy grew 5.0% year-on-year in the first quarter, beating forecasts for a 4.8% expansion and improving from 4.5% in the previous quarter.

Additional activity data released on Thursday painted a mixed but still resilient picture. China’s industrial production gained 5.7% in March from a year earlier, topping expectations of a 5.4% rise.

Retail sales, a key gauge of consumption, grew 1.7% in March, missing expectations for a 1.9% increase, highlighting continued weakness in domestic demand.

Shanghai Composite index added 0.4%, while the blue-chip Shanghai Shenzhen CSI 300 index advanced 0.7%.

Elsewhere, U.S. stock market closed at record highs overnight, with the S&P 500 and Nasdaq notching new highs. The rally was driven by strong corporate earnings and growing optimism that tensions between the U.S. and Iran could ease through renewed diplomatic efforts.

Hopes of progress in U.S.-Iran peace talks have helped stabilize world risk sentiment in recent days, easing concerns over energy supply disruptions and inflation pressures.

However, U.S. has attempted to block Iranian ports, with U.S. trying to implement restrictions on vessels entering or leaving Iran and deploying its forces near the Strait of Hormuz.