The Fed meeting Tuesday "was a letdown for the many investors looking for any change in policies," said Avis Wang, strategist at IG Markets in Singapore; "Traders are likely to be cautious as there was no significant improvement to the situation in Europe."
Regional markets took their cue from Wall Street's drop Tuesday after the Fed left its policy rate unchanged and decided against any further additional stimulus measures for now, disappointing some who had expected a hint of further steps in the near future. News of German opposition to raising the 500 billion euros ($652 billion) lending limit for the planned European Stability Mechanism also weighed on sentiment, as investors fretted about the divisions in Europe that's preventing a credible fix to the region's debt woes.
Japan's Nikkei Stock Average lost 0.2%, Australia's S&P/ASX 200 fell 0.3%, South Korea's Kospi Composite dropped 0.5% and New Zealand's NZX-50 was off 0.5%.
Dow Jones Industrial Average futures were 11 points higher in screen trade.
Exporter stocks continued to underperform amid the gloomy outlook for the global economy, with Tuesday's weak U.S. retail sales adding to concerns of sluggish sales during the key holiday season.
In Tokyo, Sony lost 1.2%, Canon dropped 0.4% and Honda Motor fell 1.2%. Samsung Electronics and LG Display, dropped 1.1% and 2.5%, respectively in Seoul.
The Sydney market skidded to a nine-day low with the benchmark S&P/ASX 200 index hitting 4168.7. Bank stocks and resources plays led losers, with BHP Billiton off 0.9%, Westpac Bank down 1.6% and National Australia Bank off 0.5%.
Japan's scandal-hit Olympus was choppy, falling 1.1% ahead of submitting a long-delayed second quarter earnings report to meet a critical deadline Wednesday that would keep its stock listed for the immediate future. Olympus is expected to restate its figures for the past five years to account for more than $1.5 billion in investment losses it had been hiding using inflated payments for acquisitions.
In foreign exchange markets, investors continued to shun the euro as traders worried Europe's debt crisis will drag on well into 2012 as last week's European Union summit failed to deliver a comprehensive plan to address the problems.
"Government bond auctions could apply additional pressure to the euro (Wednesday)," Credit Agricole strategist Adam Myers said, noting that Italy's 5-year auction will provide an indication of how markets view the newly installed "technocratic" administration.
The single currency was at $1.3035 against the dollar, from $1.3038 late Tuesday in New York, and at ¥101.65 against the yen, from ¥101.64. The dollar was at ¥77.98, compared with ¥78.01.
Hit by a continuing safety-bid towards the greenback, the Australian dollar briefly slipped below parity, and was recently at US$1.0003, from US$1.0085 late in Sydney Tuesday.
Spot gold was at $1,636.30 per troy ounce, up $5.40 from its New York settlement Tuesday. January Nymex crude oil futures were down 34 cents $99.80 per barrel on Globex.
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