Asia: Most stocks down as investors wait for Fed meeting

LONDON (ShareCast) - Asian stocks closed mostly down as investors showed caution ahead of the Federal Reserve's policy decision in the US. However, Chinese stocks managed to finish flat. After trading on the red all morning, the Shanghai composive index erased losses driven by reports that the People's Bank of China (HKSE: 3988-OL.HK - news) is expected to launch further monetary policy.

According to the Wall Street Journal, the central bank is set to launch quantitative easing, which will allow Chinese banks to swap local-government bailout bonds for loans as a way to boost liquidity and lending.

The news drove copper prices up for the second consecutive day. The LME three-month copper contract closed up 0.1% or $5.50 at $6102.50 per tonne on Tuesday.

In economic news, Chinese government data indicated that oil demand had risen 6.5% year-on-year in March.

Chinese demand came in at 10.58m barrels per day last month, the highest on government record books since September last year.

Hong Kong's Hang Seng fell 0.15%, while the Japanese market was closed for the Showa Day holiday.

Meanwhile, Australia's ASX fell 1.85% after Goldman Sachs (NYSE: GS-PB - news) said the country's AAA credit rating is at risk. The investment bank said the country could see its rating be downgraded by Standard & Poor for the first time since 1989 due to its "poor fiscal performance".

Accendo Markets analysts explained: "The commodity price doldrums, weak economic growth and political stalemate surrounding the passing of legislation have all weighed on the nation's finances." Also on Wednesday, the Thai SET index fell 0.57% after the Thailand's monetary authority unexpectedly lowered its benchmark policy rate by 25 basis points to 1.5%, against expectations that the central bank would keep rates unchanged.

New Zealand's NSX index fell 0.5% despite positive trade balance data. The trade balance came at $631m in March against forecasts of $341m. Exports and imports also came better than expected.

On the down side, New Zealand activity outlook fell to 41.3% from 42.2% the month before and business confidence was lower at 30.2 in April from 35.8.

In corporate news, Australian mining group BHP Billiton (NYSE: BBL - news) 's shares were down by 2.49% and while rival Rio Tinto (Xetra: 855018 - news) fell 1.88%.

Oil markets were also in the red, which drove oil companies such as Woodside Petroleum (Xetra: WOPA.DE - news) down by 1.1%.

Elsewhere in China, Agricultural Bank of China (Shanghai: 601288.SS - news) fell 1.95% despite posting profits up 1.5% during the last quarter. China Construction Bank was also 2.24% lower.