On Tuesday, Asia-Pacific markets mostly opened in negative territory, reflecting the cautious mood on Wall Street as investors awaited the U.S. Federal Reserve’s upcoming decision scheduled for December 10. This anticipation kept market participants on edge, leading to a subdued trading day.

The prevailing expectation is that the central bank will implement a rate cut of 25 basis points during its final meeting of the year. This adjustment would bring the Federal Funds rate down to a range of 3.5% to 3.75%. However, analysts anticipate that the Federal Reserve will adopt a more cautious approach moving forward, closely monitoring economic data to guide its future actions.

Stephen Kolano, the chief investment officer at Integrated Partners, highlighted this sentiment, suggesting that Fed Chair Jerome Powell might emphasize a data-driven approach after the rate cut. “I would not be surprised for Jerome Powell to be like, ‘We’ve cut, and now we’re in a place where we really need to watch the data,'” Kolano remarked. He noted the apparent softening in the labor market that could influence the Fed’s tone.

In Japan, the initial optimism in the markets dissipated, with the Nikkei 225 losing 0.29% and the broader Topix index dropping by 0.17%. This reversal mirrored the cautious sentiment among investors.

South Korea’s markets experienced a mixed performance; the Kospi fell by 0.32%, while the smaller Kosdaq index managed to climb 0.18%, indicating some resilience among smaller stocks.

Meanwhile, Australia’s S&P/ASX 200 index saw a decline of 0.43% during early trading, reflecting the overall cautious mood in the region as market participants awaited further clues from the U.S. central bank’s upcoming decisions.

Hong Kong Hang Seng index futures were at 25,763, nearly unchanged from the last close of 25,765.26.

U.S. stock futures were slightly higher Monday night, buoyed by President Donald Trump’s approval of Nvidia H200 chip sales to China in a deal that gives the U.S. government a hefty cut.

In after-hours trading, Nvidia climbed 2.2% following a Truth Social post Monday evening that said the chipmaking giant could ship its H200 chips to “approved customers” in China and elsewhere under the condition that a quarter of the sales will be paid to the U.S. government. 

Overnight in the U.S., the S&P 500 pulled back 0.35%, while the Nasdaq Composite slid 0.14%. The Dow Jones Industrial Average shed 215.67 points, or 0.45%.

—CNBC’s Sean Conlon and Alex Harring contributed to this report.