Asian markets swung Wednesday ahead of the Federal Reserve's much-anticipated policy announcement, while shares in Japanese car titan Nissan soared more than 20 percent after reports said it was in merger talks with rival Honda.
There were few catalysts to drive region-wide activity before the US central bank's interest rate decision, with Wall Street providing a negative lead as profit-takers moved in while economic data was mixed.
The Fed is widely expected to cut borrowing costs for the third successive time when it concludes its gathering later in the day, but the main focus is on its statement, with traders hoping for guidance on its plans for next year.
With inflation coming down but hovering above the two percent target and the labour market still robust, decision-makers have been able to loosen their grip on policy since September amid optimism they can guide the economy to a soft landing.
However, with Donald Trump due to take the White House next month pledging tax cuts, deregulation and tariffs on imports from China, there are fears that prices could be reignited, forcing the Fed to re-evaluate its rates timetable.
"We are experiencing a whirlwind of change and uncertainty that profoundly affects global economies," said Stephen Innes of SPI Asset Management.
"Questions loom: Will Donald Trump be a 'Deal Maker in Chief' or lean into his 'Tariff Man' persona? How will bond yields react? Can China effectively stimulate consumer demand? Will Trump broker peace in Eastern Europe? Will the dollar maintain its oppressive strength?"
He added that "the crucial question is whether the Federal Reserve will signal a pause starting from the January (policy) meeting".
"My view leans toward an affirmative; the real intrigue, however, lies in how explicitly the Fed will beam this potential shift and confirm a 'hawkish cut'."
While Wall Street fell -- though still just off their recent record highs -- Asian markets diverged. Hong Kong, Shanghai, Sydney, Seoul and Taipei rose but Singapore, Wellington and Manila fell.
Tokyo edged down, though Nissan scorched 24 percent higher soon after opening in response to reports it was in preliminary merger talks with Honda, adding the move would help them better compete against Tesla and other electric vehicle makers.
While both firms did not confirm the reports, they had agreed in March to explore a strategic partnership on EVs, which analysts said was aimed at catching up with Chinese competitors.
Nissan in particular has been struggling, announcing 9,000 job cuts last month and slashing its annual sales forecast.
The rise was the biggest since 1974, according to Bloomberg News.
Honda fell about two percent, while Mitsubishi Motors -- of which Nissan is the top stakeholder -- gained more than 14 percent.
On currency markets, the yen edged back against the dollar ahead of the Fed decision, while traders were also awaiting the conclusion of the Bank of Japan's own Thursday meeting as debate swirls about when it will hike rates.
Bitcoin pared gains after earlier hitting a new record of more than $108,315 Wednesday.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.2 percent at 39,281.06 (break)
Hong Kong - Hang Seng Index: UP 0.8 percent at 19,860.34
Shanghai - Composite: UP 0.7 percent at 3,385.49
Euro/dollar: UP at $1.0500 from $1.0498 Tuesday
Pound/dollar: DOWN at $1.2705 from $1.2707
Dollar/yen: UP at 153.66 yen from 153.41 yen
Euro/pound: UP at 82.63 pence from 82.52 pence
West Texas Intermediate: UP 0.3 percent at $70.26 per barrel
Brent North Sea Crude: UP 0.3 percent at $73.38 per barrel
New York - Dow: DOWN 0.6 percent at 43,449.90 (close)
London - FTSE 100: DOWN 0.8 percent at 8,195.20 (close)
dan/cwl
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