CANBERA (dpa-AFX) - Asian stocks fell on Wednesday as North Korea conducted its second weapons test in less than a week and a trade threat from U.S. President Donald Trump to China cast a shadow over the fate of the latest round of trade talks taking place in Shanghai.
Investors also awaited the outcome of a two-day U.S. Federal Reserve meeting later in the day as well as Chairman Jerome Powell's post-meeting press conference for clues on the policy path.
China's Shanghai Composite index fell 19.83 points or 0.67 percent to 2,932.51 after official data showed the country's factory activity contracted for the third straight month in July amid a tariff war with Washington and weak domestic demand. The official manufacturing PMI for the month came in at 49.7.
The non-manufacturing index fell to 53.7 from 54.2 in June while the composite index came in with a score of 53.1, up marginally from 53.0 in the previous month. Hong Kong's Hang Seng index ended down 1.31 percent at 27,777.75.
Chinese property developers inched lower after a top decision-making body of the ruling Communist Party said that China will not use the property market as a form of short-term stimulus.
Japanese shares fell as investors watched developments on the trade front and the latest batch of corporate earnings. The Nikkei average slid 187.78 points or 0.86 percent to 21,521.53 while the broader Topix index closed 0.66 percent lower at 1,565.14.
Nintendo declined 1.2 percent. The entertainment giant booked a year-on-year drop in operating profit, despite stronger sales of its Switch console. Sumitomo Mitsui Financial dropped 1 percent and Sumitomo Mitsui Trust Holdings lost 3.7 percent after reporting disappointing Q1 results.
Technology company Konica Minolta plunged 11.4 percent as it posted unexpected net loss in the three months to June. Sony soared 5.3 percent after it posted a record first-quarter operating profit.
Australian markets slipped into the red after hitting record highs in the previous session. The benchmark S&P/ASX 200 index dropped 32.50 points or 0.47 percent to 6,812.60 while the broader All Ordinaries index ended up 31.60 points or 0.46 percent at 6,896.70.
Banks Commonwealth and Westpac fell 1.3 percent and 1.2 percent, respectively while ANZ eased 0.3 percent and NAB declined half a percent.
CYBG slumped 13.4 percent after it reported a dip in mortgage loans and margins in the third quarter.
Cement maker Adelaide Brighton plummeted 18 percent after scrapping its interim dividend and flagging lower FY earnings. Boral plunged 8 percent and CSR tumbled 6.3 percent.
Rare earths miner Lynas Corporation rallied 2.4 percent amid rising trade tensions between Beijing and Washington. Commercial explosives supplier Orica jumped 3.4 percent after a brokerage upgrade.
In economic releases, Australia's consumer price inflation rose at a faster-than-expected rate in the second quarter on higher fuel prices, the Australian Bureau of Statistics said in a report.
Consumer prices gained 0.6 percent sequentially, after remaining unchanged in the preceding quarter. Economists had expected a 0.5 percent increase.
Seoul stocks fell notably amid an intensifying trade row with Japan and rising security tension on the Korean Peninsula after North Korea launched two short-range ballistic missiles into the sea Wednesday morning, the second launch of missiles in a week.
The benchmark Kospi ended down 14.13 points or 0.69 percent at 2,024.55. Market heavyweight Samsung Electronics lost 2.6 percent after its profit slumped by more than half in the second quarter.
Industrial output in South Korea rose a seasonally adjusted 0.2 percent on month in June, Statistics Korea said - following the 1.3 percent decline in May. On a yearly basis, industrial production sank 2.9 percent after rising 0.2 percent in the previous month.
New Zealand shares hit a record high earlier in the day before giving up all gains. The benchmark S&P/NZX 50 index rose to a record high of 10,922.98 before ending the session down 21.20 points or 0.19 percent at 10,857.75. Dairy firm a2 Milk Company climbed 1.2 percent to extend gains for the third straight session.
Overnight, U.S. stocks fell for a second straight session after President Donald Trump lashed out at China in a series of posts on Twitter claiming there are 'no signs' that China is following through on plans to purchase U.S. agricultural products and suggested the Chinese are hoping to wait out the U.S. presidential election to get a better deal.
Encouraging personal income and spending, consumer confidence and housing data helped to limit the downside to some extent.
The Dow Jones Industrial Average slipped 0.1 percent, while the tech-heavy Nasdaq Composite eased 0.2 percent and the S&P 500 dropped 0.3 percent.
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