Australia's S&P/ASX 200 index finished the session down 4 points, or 0.1 per cent, at 5709, with financials the worst performers as Westpac lost 0.6 per cent and ANZ fell 0.6 per cent. ???Telstra also weighed, falling 1.4 per cent.

At the start of trading day, investors were grappling with an escalation of US threats toward North Korea after US president Donald Trump threatened to "totally destroy" the country of 26 million people and mocked its leader, Kim Jong Un, as a "rocket man".

But shares recovered though the session as attention turned to what the Federal Reserve will have to say about the US economy in a session that will likely follow the announcement of a highly-anticipated winding back of the Fed's massive bond holdings.

"Signs of an inflation trough will put a floor under inflation expectations and nominal bond yields," AMP's head of Dynamic Markets Nader Naeimi said.

In the meantime, a "regime shift from liquidity to growth is underway," he added. "Further market gains from here will be driven by growth and not easy liquidity."

Also catching investors' collective attention on Wednesday was news that futures markets are now pricing in two rate hikes by the Reserve Bank of Australia over the next 12 months, despite the bank calling the top of the iron ore cycle and against a background of highly-indebted households and little to no wage growth.

"The past few weeks have seen an interesting switch by financial markets towards more optimistic views on the global and domestic growth outlooks," CBA economist Michael Workman noted. "It means that we should expect higher official interest rates in the major economies over the next few quarters."

Resource firms came under pressure as Chinese iron ore futures fell to their lowest level in almost two months, pressured by weaker steel prices and an environmental campaign by Beijing to reduce air pollution caused by steel manufacturing.

BHP shares fell 0.4 per cent, Rio TInto declined 1.2 per cent and pure iron ore play Fortescue lost 1.8 per cent.

Helping to limit downside, Brambles climbed 4.3 per cent after it was upgraded to neutral at Credit Suisse.

In corporate news, Seven Group Holdings jumped 9.8 per cent following a move to buy the balance of Coates Hire from private equity giant The Carlyle Group for $517 million, increasing its exposure to industrial services.

Trading in Nib Holdings shares were halted after health insurer said it would launch a $60 million capital raising to fund a $155.5 million acquisition of corporate health insurance provider GU Health.

Stockwatch

Brambles

Brambles shares lifted 4.3 per cent on Wednesday after Credit Suisse analysts lifted their recommendation on the pallet firm "neutral" from "underperform". The stock has lost 25 per cent of its market value this year, and the broker said it believes much of the downside risk for the firm is now priced into the shares.

"During the past year the US pallet business has faced significant pricing pressure due to competition from PECO and the whitewood pallet market. There are not yet signs of this improving, but current high lumber prices could drive up whitewood pallet prices," the analysts wrote in a note to clients.

"Also, CEO Graham Chipchase buying 14,000 shares at $9 per share signals increased confidence in the Brambles businesses, while the recent US dollar weakness looks likely to have hit a turning point with US 10-year yields rates moving back up."

Movers

Iron ore

Chinese iron ore futures are at their lowest level in almost two months, pressured by weaker steel prices and an environmental campaign by Beijing that has restricted operations of sinter facilities. The most-traded iron ore contract on the Dalian Commodity Exchange was down 1.9 per cent in late Wednesday trade at 497.5 yuan ($US76) a tonne after touching a session low of 487.50 yuan earlier, its weakest level since July 25. Weaker futures could weigh further on spot iron ore prices which dropped below $US70 a tonne on Tuesday night for the first time since July. The spot benchmark has fallen 14 per cent from late August.

Job ads

The surge in jobs over the past year is showing little sign of abating with figures pointing to continued steady demand for new workers. The Department of Employment said on Wednesday job advertisements posted on the internet rose a further 0.3 per cent in August to be 6.4 per cent higher than a year ago. Job ads stand nearly 25 per cent higher than a low point recorded in October 2013. The Reserve Bank is anticipating continued solid employment growth.

All quiet

The past five trading sessions on Wall Street have been the "most peaceful days in the history of the markets," Charlie Billelo of investment advisory firm Pension Partners said. The S&P 500's average intraday range of 0.24 per cent is testament to the relaxed attitude investors are carrying into Thursday morning's US Fed meeting outcome, during which chair Janet Yellen is expected to give the green light to unwinding the central bank's bloated balance sheet. Bilello also noted that the S&P 500 volatility, or Vix, index has averaged 10.93 so far this month - which sets it on the path for the least volatile September in history.

Kiwi polls

The New Zealand dollar jumped 0.6 of a US cent late Friday afternoon to as high as US73.75?? after traders reacted to a new poll showing the ruling National Party led the Labour Party heading into this weekend's election. The Colmar Brunton Poll showed National ahead 46 per cent to Labour's 37 per cent. Separately, balance of payments data and an earthquake which shook buildings in Wellington failed to have much impact on the currency, which traded at US73.67?? in late Wednesday trade.