Asian equities mostly inched higher on Wednesday, tracking a pause in the recent rally in oil prices, even as investors remained cautious amid escalating tensions in the Middle East and 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% to 54,946. South Korean Kospi was also trading in green, up 219.51 points or 3.39% at 5,859.99. Meanwhile, Shanghai was down 0.4% and Hong Kong’s HSI dropped 46 points. Shenzhen also gained 7 points.The geopolitical situation remained volatile. Israel escalated its offensive by killing Iran’s security chief, while Iran launched fresh strikes on oil facilities in the United Arab Emirates. A senior Iranian official said the new supreme leader rejected de-escalation offers conveyed by intermediaries, signalling no quick end to a war that has unleashed a global oil shock.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 dropped 1.6%. The decline came even as the Strait of Hormuz continued to remain largely shut.According to Natasha Kaneva, head of global commodities research at JPMorgan, the relative steadiness in Brent and WTI prices points to a temporary cushion created by regional inventory overhangs, benchmark composition and policy interventions.In the US, stock futures edged higher after a positive session on Wall Street. S&P 500 futures and Nasdaq futures both rose 0.2%, supported by expectations of strong earnings from chipmaker Micron Technology. Markets are also awaiting its results later in the day for commentary on chip shortages and pricing trends.Attention is now centred on the Federal Reserve’s policy decision due later on Wednesday. Investors will closely watch the central bank’s updated economic projections, particularly the “dot plot”, amid concerns it may no longer indicate any rate cuts this year.The Reserve Bank of Australia has already begun 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 change is expected there, though markets are pricing in a rate increase by year-end.In currency markets, the US dollar weakened, with the euro steady at $1.1539 after gaining 0.3% overnight. The Japanese yen held at 159 per dollar, having strengthened over the past two sessions and moved away from the 160 level that has previously triggered official intervention.Meanwhile, US Treasuries saw some support following a strong auction of 20-year bonds. Yields on 10-year Treasury notes were flat at 4.2024%, after declining 2 basis points in the previous session.