Stocks in Japan recovered early losses and those in Hong Kong edged up, while Australian shares underperformed. Futures on the S&P 500 Index nudged higher after US equities closed flat, with investors bracing for Wednesday's Federal Reserve policy decision against the backdrop of recent turmoil in global markets that's put equities on course for the worst year since 2008. Earnings after hours from FedEx stoked doubts about the strength of global trade, with the shares dropping 6 per cent after a lower profit forecast -- just three months after raising it.
The MSCI Asia Pacific Index rose 0.1 per cent as of 10:31am Tokyo time. Japan's Topix index fell 0.1 per cent.
The Shanghai Composite advanced 0.1 per cent and Hong Kong's Hang Seng Index added less than 0.1 per cent.
Australia's S&P/ASX 200 Index fell 0.2 per cent while South Korea's Kospi rose 0.5 per cent.
S&P 500 futures rose 0.4 per cent. The S&P 500 Index was little changed at the close of trading in New York.
While an interest-rate increase from the Fed on Wednesday is widely expected, it's rare for the central bank to do so during such market turmoil, offering a ray of hope to some investors hoping they opt to pause. President Donald Trump continued with his criticism of policy makers, warning them to avoid "yet another mistake" just hours before the two-day meeting began.
"We're still in a very treacherous trading environment here, and I don't think we've seen any signs yet that we're getting out of that," said Matt Forester, the chief investment officer at BNY Mellon's Lockwood Advisors. "We have to continually be careful."
Beyond the Fed looms more trouble for markets: on Friday night, spending authority expires for a swathe of the US government unless Trump and Congress reach a deal. Trade tensions remain in focus as US Treasury Secretary Steven Mnuchin said US and China are planning to hold meetings in January to negotiate a broader truce but are unlikely to have any face-to-face contact before then.
The Fed wraps up its final policy meeting of 2018. The rate decision will be followed by a press conference with Chairman Jerome Powell.
The Bank of Japan's monetary policy decision is due on Thursday, followed by a briefing from Governor Haruhiko Kuroda. A Bank of England decision is also scheduled on Thursday.
The yen rose 0.1 per cent to 112.42 per dollar. The offshore yuan added 0.1 per cent to 6.8881 per dollar.
The Bloomberg Dollar Spot Index fell 0.1 per cent.
The euro rose 0.2 per cent to US$1.1381 while the pound was at US$1.2664, up 0.2 per cent.
The benchmark US oil grade dropped more than 8 per cent at one point, tumbling past US$46 a barrel as traders fretted about the outlook for growth. The US dollar fell against most G-10 peers.
West Texas Intermediate crude rose 0.3 per cent to US$46.37 a barrel, after falling more than 7 per cent.
Gold was little changed at US$1,249.11 an ounce.