Xero Ltd's stock surged 7.34% during intraday trading on Tuesday, significantly outperforming the broader market movement.

The rally in Xero shares came as part of a broader gain in Australian technology stocks, which tracked their U.S. peers higher. Investors remained optimistic that the ongoing Middle East conflict could see a resolution, fueling a risk-on sentiment across global equity markets.

Wall Street's technology-heavy indices rallied more than 1% on this optimism, providing a positive lead for Australian tech stocks. Xero, being a major player in the sector, benefited from this overall market sentiment shift towards technology shares.