Australian shares are poised to rise on Wednesday as investor sentiment improves following signs of progress in US-Iran negotiations and easing tensions over the Strait of Hormuz.

Oil prices softened after Pakistan's mediation and Iran's tentative willingness to negotiate raised hopes of a temporary reopening of the vital shipping route, reducing fears of further disruptions to global energy supplies.

Overnight, the S&P 500 and the Nasdaq Composite each rose 0.1%, while the Dow Jones Industrial Average fell 0.2%.

In the macroeconomy, Australia's building activity report is due at 11:30 am Sydney time.

In corporate news, DroneShield (ASX:DRO) said Oleg Vornik has stepped down as chief executive, with Angus Bean appointed as his replacement, while chairman Peter James will retire from the board and not seek re-election at the upcoming annual general meeting, according to a Wednesday Australian bourse filing.

Santos (ASX:STO) has successfully appraised the Quokka-1 well on Alaska's North Slope, revealing 143 feet of high-quality Nanushuk reservoir and strong flow rates, supporting plans for a potential two-drill-site development alongside the imminent start-up of Pikka phase 1, according to a Wednesday Australian bourse filing.

Australia's benchmark index rose 1.7% or 149.3 points to close at 8,728.80 on Tuesday.