Asian stocks ended Wednesday's session on a mixed note as investors awaited the Federal Reserve's interest rate decision later in the day for clues on how aggressive the U.S. central bank intends to be in the coming months.
Amid mounting concerns over inflation that is running at a four-decade high, investors are bracing for a more aggressive move than the 50 basi -point hike they'd broadly priced in.
Chinese and Hong Kong stocks advanced after a slew of Chinese data topped expectations. China's Shanghai Composite Index ended up half a percent at 3,305.42, giving up some early gains. Hong Kong's Hang Seng Index climbed 1.1 percent to 21,308.21.
Chinese factory activity rebounded slightly in May, retail sales fell less than expected in the month and fixed asset investment for the January to May period topped expectations due to the relaxation of pandemic-related restrictions, data showed earlier in the day.
Japanese shares fell despite the Bank of Japan ramping up its bond-buying program and core machinery orders, an indicator of capital expenditure, posting surprise double-digit growth in April.
The Nikkei 225 Index fell 1.1 percent to 26,326.16, ending at a more than one-month low and extending losses for a fourth straight session ahead of the Fed announcement. The broader Topix closed 1.2 percent lower at 1,855.93.
Energy stocks underperformed after oil prices fell sharply on Tuesday on China demand concerns. Inpex Corp. tumbled 3.7 percent, Japan Petroleum lost 4.6 percent and Idemitsu Kosan gave up 3.9 percent. Chip-making equipment manufacturers and retailers also suffered broad-based losses.
Seoul stocks lost ground after the government reported the country's unemployment rate ticked up 0.1 percentage point to 2.8 percent in May. The Kospi plunged 1.8 percent to 2,447.38, hitting a fresh 19-month low to extend its losing streak to a seventh straight session.
Tech shares led losses, with Naver and Kakao plummeting 3-5 percent. K-pop powerhouse Hybe nosedived almost 25 percent after BTS announced an unexpected decision to suspend group projects.
Australian markets extended loses to a fourth day amid broad-based selling as RBA Governor Philip Lowe warned that inflation could reach 7 percent by the end of the year before easing.
The benchmark S&P/ASX 200 Index closed 1.3 percent lower at 6,601, with technology and energy stocks pacing the declines. The broader All Ordinaries Index fell 1.4 percent to 6,785.80. Woodside Energy Group, Xero and Block lost 3-7 percent.
New Zealand's benchmark S&P/NZX-50 Index fluctuated before ending marginally lower for the day.
U.S. stocks ended mixed overnight after a measure of producer prices increased solidly in May, underscoring the ongoing threat to the economy from a bout of inflation.
The Dow dipped half a percent and the S&P 500 slipped 0.4 percent to extend losses for a fifth straight session, while the tech-heavy Nasdaq Composite Index edged up 0.2 percent.
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