WPL Woodside Petroleum Limited

By Chao Deng 

Markets in Asia were mostly lower Wednesday, after oil prices slid to two-month lows and investors stayed cautious before the Federal Reserve concludes a two-day policy meeting.

The Shanghai Composite fell 1.7% and Hong Kong's Hang Seng Index lost 0.8%. Chinese energy shares listed in Hong Kong fell, with China Shenhua Energy Co. and China Petroleum & Chemical Corp. down 2.8% and 1.6%, respectively.

South Korea's Kospi lost 0.1% and Australia's S&P ASX 200 fell 0.2%, with energy shares on the benchmark 1.3% lower.

Santos Ltd. fell 4.8% and Woodside Petroleum Ltd. was 2.6% lower.

Meanwhile, Japan's Nikkei Stock Average was up 0.7%, amid expectations that the Bank of Japan will introduce more easing later in the week.

The Australian dollar fell more than 1% to as low as $0.7109 Wednesday after disappointing Australian inflation data boosted expectations that the central bank may cut interest rates at its meeting next week. The currency was last at $0.7122.

Third-quarter inflation rose 0.5% on-quarter, compared with a 0.7% increase expected by economists surveyed by The Wall Street Journal. Consumer prices rose 1.5% on-year. The market now is pricing in about a 70% chance that the Reserve Bank of Australia will cut rates at its policy meeting next week, up from 25% Tuesday.

Shares in the region have been lackluster this week, before the Fed concludes its two-day policy meeting on Wednesday. Although the central bank is widely expected to leave benchmark interest rates unchanged near zero, investors will parse the Fed's post-meeting statement for clues about the path of its monetary policy.

"Markets are at a tipping point, hesitant of rallying further ahead of what the Fed and BOJ do," said Angus Nicholson, a market analyst at brokerage IG. "People don't want to put on big positions ahead of the two events."

Comments from the European Central Bank last week about possible easing in December sparked a rally across global equities, just before China's central bank cut interest rates late on Friday.

The MSCI Asia Pacific closed Tuesday just off its highest level since mid-August. The benchmark, up 9.7% month-to-date, is on track for its largest monthly percentage gain since April 2009.

In China, the defense sector fell 5% as investors cashed in on a jump of more than 7% the previous session. The sector rallied Tuesday after a U.S. Navy ship sailed close to artificial islands in the South China Sea claimed by China, escalating territorial tensions.

Near-term performance also will depend on whether leaders reveal new plans to boost the sector at their economic meeting in Beijing this week, according to analysts.

The Japanese yen was last at Yen120.41, roughly flat compared with its close in Asia on Tuesday. The currency traded as strong as Yen120.14 against the dollar a day earlier, after the South China Sea news sent investors toward haven assets.

In Australia, shares of National Bank of Australia Ltd. were down 2.2%, after the firm unveiled a deal to sell control of its life-insurance business and plans to exit its U.K. business early next year. The firm also said its full year net profit rose 20% to 6.34 billion Australian dollars ($4.56 billion).

In South Korea, battery maker LG Chem Ltd. rallied 5% after the local Nihon Keizai Shimbun reported that the firm is in the final stage of becoming a lithium-ion batteries supplier to Tesla Motors . The stock rose as much as 7.3% during the trading day.

An LG spokesman declined to confirm the report, but Tesla told The Wall Street Journal Wednesday it had a contract earlier this year with LG for upgrades to the U.S. electric vehicle maker's first car, the Roadster, which has since been discontinued.

After the market close in Japan, Nintendo Co. reported an operating profit of Yen8.98 billion ($74.6 million) in the April-to-September period, buoyed by its core game business and game-interactive figurines and cards. The gains were a turnaround from a loss of Yen215 million a year ago, but lower than analysts' expectations of a Yen14.4 billion profit.

Nintendo shares have surged 83% year to date, beating the broader market's 8% gain.

Brent crude oil was down 0.1% at $46.75. U.S. oil prices fell 2.3% overnight, on expectations that U.S. crude stockpiles grew for the fifth straight week last week.

Overnight, U.S. stocks mostly fell as oil prices slumped and investors await the outcome of the Fed's meeting.

Gold was up 0.5% at $1,171 a troy ounce.

Takashi Mochizuki, In-Soo Nam and Robb M. Stewart contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

(END) Dow Jones Newswires

October 28, 2015 04:36 ET (08:36 GMT)

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