Major indexes in Asia were mostly higher on Wednesday, after Moody's downgraded China's credit rating, and as investors awaited minutes from the U.S. Federal Reserve and an upcoming OPEC meeting.
Moody's Investor Service downgraded China's credit rating to A1 from Aa3, and changed its outlook to stable from negative. While planned reforms in China will slow the increase in leverage in the economy, it will not prevent the rise in leverage, Moody's cautioned.
The Australian dollar slipped from levels around $0.7480 to as low as $0.7452 in the wake of the announcement. China is among Australia's largest export markets.
The Nikkei 225 rose 0.66 percent or 129.7 points to close at 19,742.68 on Wednesday while the Kospi gained 0.24 percent or 5.6 points to finish at 2,317.34. Australia's benchmark S&P/ASX 200 index ended the session higher by 0.15 percent or 8.809 points at 5,769.
Markets in greater China were mixed following the ratings downgrade, but had recovered off the lows at the market open. The Hang Seng Index dipped 0.14 percent at 3:02 p.m. HK/SIN. The Shanghai Composite reversed earlier losses to close 0.06 percent or 1.8434 points higher at 3,063.7904 while the Shenzhen Composite gained 0.525 percent or 9.4016 points to finish at 1,798.8692.
Investors are also awaiting the release of minutes from the Fed's for its last meeting on Wednesday in the U.S. for details on the probability of a rate hike in June. More information from the Fed on how it intends to unwind its balance sheet is expected.
Another potentially market-moving event is the OPEC meeting on Thursday that will be led by Saudi Arabia. Oil prices have been rising on optimism over hopes that will be OPEC-led output cuts will be extended.
Oil prices held steady after ending the last session higher. Brent crude gained 0.37 percent to trade at $54.35 a barrel and U.S. West Texas International crude edged up by 0.33 percent to trade at $51.64.
Over in Japan, Toshiba's U.S. nuclear arm Westinghouse Electric announced it had negotiated a deal that would let the company borrow $800 million. Toshiba shares surged 8.36 percent to close at 251.5 yen a stock.
Singapore-listed commodities trader Noble Group said it was aware of media reports that Sinochem had stopped pursuing a stake in the company, but was unable to confirm whether this was accurate.
Shares of Noble reversed steep losses earlier in the session to gain 11.9 percent at 2:53 p.m. HK/SIN. Trade in shares of the company had been halted in the last session after shares plunged more than 32 percent.
In India, shares of Tata Motors were 4.3 percent higher in pre-open trade after the company beat earnings projections for Q4. Profits for Q4 were 17 percent lower on year.
Citi analysts Jamshad Dadabhoy and Arvind Sharma retained their "Buy" call on the stock, adding that the strong product pipeline is likely to drive profitability going forward.
Meanwhile, low cost carrier Airasia X tumbled 14.95 percent after it reported that Q1 profits fell 94.2 percent due to the soft Malaysian ringgit and increased fuel costs.
In currency news, the dollar strengthened against a basket of rival currencies to trade at 97.401, off the six-month low seen earlier in the week. Against the yen, the greenback edged higher for the second straight session to fetch 111.92.
"U.S. Treasury yields had a small sell-off at the start of the New York session, with the move higher in yields helping the dollar perform across the board," National Australia Bank Currency Strategist Rodrigo Catril said in a Wednesday note.
The euro was mostly flat against the dollar after surpassing six-month highs on reduced political risk. Euro/dollar last traded at $1.1175.
"There is a growing possibility of the European Central Bank (ECB) rattling the financial markets in the pending ECB meeting as the recent political relief invites ECB hawks. With economic data from Europe following a positive trajectory, the ECB could start considering a stimulus exit at the next meeting, which may strengthen the euro further," said Lukman Otunuga, an analyst at FXTM, in a note.
Equities stateside gained for the fourth straight session after last week's sell-off, with the Dow Jones industrial average making the most gains and ending the session higher by 0.21 percent or 43.08 points at 20,937.91.
— CNBC's Leslie Shaffer contributed to this report.