Asia: Markets firmly in the red ahead of FOMC's decision

The majority of Asian stocks were firmly in the red on Wednesday, as investors remained cautious ahead of the upcoming Federal Reserve’s decision on interest rates.

The US central bank concludes its two-day meeting on Wednesday and while it is widely expected to postpone a first hike in interest rates until the new year, market participants were reluctant to make any big bets.

“After the September FOMC meeting the market consensus was surprised by the dovish tone of the Fed,” analysts at Rabobank said.

“However, rather than been reassured by the expectation of low rates for longer, risky assets lost their footing as the market absorbed a less appealing outlook for both US and global growth.”

The Shanghai Composite Index fell 1.72%, while Hong Kong’s Hang Seng Index lost 0.8%, dragged lower by a decline in Chinese energy stocks.

China Shenhua Energy and China Petroleum & Chemical tumbled 2.82% and 1.57% respectively, while China’s defence sector plunged 5% as investors cashed in on the previous day’s 7% surge.

However, Japan’s Nikkei Stock Average bucked the trend and climbed 0.67% as investors remained buoyed by the prospect of fresh stimulus from the Bank of Japan later this week.

Elsewhere, South Korea’s Kospi lost 0.1%, while Australia’s S&P/ASX 200 declined 0.21%, as energy stocks pulled the benchmark lower, with Santos slumping 4.42% and Woodside Petroleum sliding 2.18%.

Shares in National Bank of Australia declined 2.16% after the lender unveiled plans to exit its UK business early next year and indicated it was close to agree a deal to sell its life-insurance division.

Australian stocks received further bad news after inflation was shown to have increased 0.5% in the third quarter, compared with expectations for a 0.7% gain.

On a year-on-year basis, consumer prices rose 1.5%, in line with the previous month but below the 1.7% reading analysts had forecast.

As a result, the Australian dollar tumbled 0.79% against its US counterpart, having fallen to as low as $0.7109 earlier in the session after the inflation figures led to speculations the Reserve Bank of Australia might cut interest rates next week.

Elsewhere, the yen climbed 0.11% against the US dollar.