HONG KONG, RAW – Asian shares stayed stuck at seven-month lows on Wednesday, as markets continued to digest a storm in Chinese equity markets, while the dollar rested with traders reluctant to place large bets ahead of the outcome of the Federal Reserve meeting.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.35 per cent in early trading, having fallen in each of the three previous sessions as regulatory crackdowns in China roiled stocks in the technology, property and education sectors, leaving international investors bruised.

Japan’s Nikkei slid 1.01 per cent, Chinese bluechips dropped 1.51 per cent, and Australian shares fell 0.43 per cent. Hong Kong bucked the trend, rising 0.63 per cent, after closing at its lowest level since November the day before.

“China and the Fed are the two key things for today,” said Tai Hui, chief market strategist for Asia Pacific, at JPMorgan Asset Management.

Major questions were whether markets would stabilise as they processed the news out of China and whether the spread of the Delta variant posed a risk to growth in the United States and Europe, he added.

“We are still trying to digest the news from China, what’s going to be new is how the Fed view the latest round of (COVID-19) infections and whether they need to readjust their view,” he said.

The statement from the Fed policy meeting, and a press conference from chairman Jerome Powell are due at 2 pm EDT (1800 GMT).

Markets will be watching closely for any hints in relation to inflation, economic growth, interest rates and when the Fed will likely start reducing its purchases of government bonds.

The declines in Asian equities on Tuesday spread to other markets overnight, causing Wall Street to retreat a little from the record highs set earlier in the week.

The Dow Jones Industrial Average ended Tuesday down 0.2 per cent, the S&P 500 shed 0.5 per cent and the Nasdaq Composite slid 1.2 per cent. Earlier the pan-European STOXX 600 index finished 0.54 per cent lower.

After the US close, Google parent Alphabet Inc, Microsoft, and Apple all reported record quarterly earnings, though the smartphone maker’s shares slid in aftermarket trading on the back of a slower growth forecast.

In currency markets, the US dollar sat below recent highs after a month long rally, the safe-haven yen gained and the risk-sensitive Australian and New Zealand dollars dropped back.

Analysts at CBA attributed the moves to falling risk sentiment on the back of the Chinese regulatory crackdown.

Oil prices rose as industry data showed US crude and product inventories fell more sharply than expected last week, outweighing worries about the consequences of surging COVID-19 cases.

US crude ticked up 0.47 per cent to $US72.01 ($A97.79) a barrel and Brent crude rose 0.35 per cent to $US74.77 ($A101.54) per barrel.

Gold was slightly lower, with spot trading at $US1,798.45 ($A2,442.35) per ounce.