Asian stock markets were mostly higher on Wednesday as oil prices paused their recent rally, although investors remained cautious amid rising tensions in the Middle East as they awaited signals from the US Federal Reserve on interest rates.As of 9:15 am, Japan’s Nikkei was up 1,245.87 points, or 2.32%, at 54,946. The South Korean Kospi was also trading in the green at 5,859.99, up 219.51 points or 3.39%. Meanwhile, Shanghai lost 0.4% and Hong Kong’s HSI fell 46 points. Shenzhen also gained 7 points.The geopolitical situation remained unstable. Israel escalated its offensive by assassinating Iran’s security chief, while Iran launched new attacks on oil facilities in the United Arab Emirates. A senior Iranian official said the new supreme leader has rejected de-escalation offers made by brokers, signaling there will be no imminent end to the war that has sparked a global oil crisis.Despite the ongoing conflict, oil prices pulled back from recent highs. Brent crude slipped 1% to $102.28 a barrel, while US West Texas Intermediate fell 1.6%. The decline came even as the Strait of Hormuz remained largely closed.According to Natasha Kanaeva, head of global commodity research at JPMorgan, the relative stability in Brent and WTI prices points to a temporary cushion created by regional inventory overhangs, benchmark structure and policy intervention.In the US, stock futures rose after a positive session on Wall Street. S&P 500 futures and Nasdaq futures both rose 0.2%, supported by strong earnings expectations from chip maker Micron Technology. Markets are also awaiting its results later in the day for comment on chip shortages and pricing trends.Now the focus is on the Federal Reserve’s policy decision on Wednesday. Investors will be keeping a close eye on the central bank’s updated economic projections, particularly the “dot plot”, amid concerns that there may now be no sign of any rate cuts this year.The Reserve Bank of Australia has already kicked off a busy week for central banks with a rate hike, while the Bank of Canada is also scheduled to meet later in the day. No policy changes are expected there, although markets are estimating a rate hike by the end of the year.In currency markets, the US dollar weakened, with the euro steady at $1.1539 after gaining 0.3% overnight. The Japanese yen remains at 159 per dollar, having strengthened over the past two sessions and moving away from the 160 level that earlier triggered official intervention.Meanwhile, US Treasuries found some support after a strong auction of 20-year bonds. Yields on 10-year Treasury notes were steady at 4.2024%, after falling 2 basis points in the previous session.
