Shanghai Composite Index fell 2.7 percent on Monday, its steepest drop in almost three weeks, after data over the weekend added to concern China’s economic slowdown is deepening and as traders gauged the level of state support for equities.

Tokyo’s Nikkei also pared gains, sitting 0.55 percent after rallying 1.33 percent in the morning. However, it must still be noted that China-related uncertainty will keep markets unstable. More signs of slowing economic growth in China weighed on prices for copper and other commodities, driving stocks of raw-material producers down.

China is one of the biggest destinations for Japanese exports.

“We expect the BOJ will likely ease next January”, said Masamichi Adachi, senior economist at JPMorgan Securities Japan.

Opinion: What will happen when prices in China tumble, as they must?

American markets seemed rejuvenated after dipping Monday amid interest rate worries ahead of the two-day policy rate meeting of the U.S. Federal Reserve, which starts Wednesday. Higher borrowing costs threaten firms with dollar debt, including those in Asia. It shed 1.5% on Monday.

FXTM research analyst Lukman Otunuga said: “A sense of positivity has dispersed across the financial markets ahead of the awaited FOMC statement on Thursday, as gains were viewed across the board”.

The Bank of Japan held fire on expanding its unprecedented monetary easing scheme on Tuesday but said the economy was being dragged by a slowdown in key emerging markets, while it was forecast to unveil further measures “before too long”.

Following the BOJ’s decision, the U.S. dollar briefly fell to as low as Yen119.91 from Yen120.34.

As well, the central bank says it will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at annual paces of about JPY3trn and JPY90bn respectively. It has lost about 40 percent since hitting a June 12 peak.

In Australia, Tuesday’s selling came despite a party coup that brought Malcolm Turnbull to power as the fourth prime minister in just over two years.

Toyota gained 2.19 percent to 7,161 yen, market heavyweight Fast Retailing, operator of the Uniqlo clothing chain, rose 1.69 percent to 47,150 yen, while videogame giant Nintendo, which appointed a new president yesterday, lost 1.28 percent to 22,620 yen.

If it does hike on Sept. 17, the Fed would become the first central bank to successfully emerge out of the shadow of quantitative easing coupled with near zero interest rates, a feat not managed by any of its peers in recent times.

The Nikkei-225 ended the day 0.34% higher at 18,026.48.