Asia stocks erase losses ahead of Fed, but Shanghai lags

Asian stock markets outside of Shanghai erased losses to end higher on Wednesday, but the mood was cautious ahead of the Federal Reserve's policy decision.

Earlier in the day, Asian indices declined across the board after U.S. stocks were sold off on Tuesday. The Dow Jones Industrial Average and Nasdaq Composite closed down nearly 2 percent each after data showed orders for business equipment fell 3.4 percent last month, highlighting the impact of the slowing global economy on U.S. multinationals.

Attention was on the outcome of the U.S. Federal Reserve's two-day review later in the day. No change in policy is expected, but market players will watch for differences in wording, such as "considerable time," that could hint at the timing of a rate hike.

"The question now becomes when will we see a rate rise? If corporates continue to feel the strain of the ever-strengthening USD on rate-rise speculation -which will lead to lower job creation and slower wage growth (which is already suffering) - will this stay the hand of the Fed?" said Evan Lucas, market strategist at IG, in a note.

ASX 200
CNBC 100

Shanghai Composite 1.4% lower

China's benchmark stock index ended at a one-week low, extending losses into a second session after data on Tuesday showed December industrial profits falling an annual 8 percent.

Financials and property counters were among the biggest percentage losers. Insurers China Pacific and China Life tanked over 4 percent each while Poly Real Estate eased 3.7 percent.

Nikkei 0.1% higher

Japan's benchmark Nikkei index reversed losses to hit a new one-month high for the second straight session.

Exporters rallied as the yen weakened against the greenback, breaching the 118 handle. Sharp surged over 4 percent while Panasonic jumped 2 percent.

Sony rallied nearly 3 percent on reports it is cutting a thousand jobs at its loss-making smartphone business.

ASX up 0.1%

Australia's S&P ASX 200 ended at its highest levels since September 10, rising for a fifth straight day. The Australian dollar jumped nearly 1 percent to hit 80 U.S. cents after fourth-quarter consumer price inflation rose 1.7 percent on year, versus estimates for a 1.8 percent annual rise.

Mining products firm Bradken plunged 35 percent after announcing that a takeover deal with a private equity consortium was cancelled.

Kospi 0.5% higher

South Korean stocks hit a seven-week high after reversing losses in the morning session. Among the top gainers, Posco and Samsung Heavy Industries popped 2 percent each.