Japan's Nikkei leads Asia-Pacific markets higher as investors digest outsized Fed rate cut

Japan's Nikkei 225 led Asia-Pacific markets higher Thursday, as traders assessed the Federal Reserve's decision to cut interest rates by a half-percentage point.

Both the Nikkei and the broad-based Topix were up about 2%. The Japanese yen weakened to 143.09 against the U.S. dollar.

The Fed lowered its interest rate by a half percentage point overnight, bringing its target range to 4.75% to 5%.

In lockstep with the Fed, the Hong Kong Monetary Authority cut its interest rate by 50 basis points to 5.25, as the city's currency is pegged to the greenback.

Hong Kong's Hang Seng index futures pointed to a flat open for HSI, hovering at its Tuesday close of 17,660. Hong Kong markets will return to trade after being closed for a public holiday on Wednesday.

New Zealand's GDP for the second quarter contracted by 0.2% from the previous quarter, according to the official data released Thursday morning, less than Reuters poll estimates of a 0.4% decline.

Investors in Asia will also assess August trade data from Malaysia and unemployment numbers from Australia.

Bank of Japan is poised to kick off a two-day meeting ending Friday, where the central bankers will make a key rate decision, after the central bank ended its decades-long ultra-low interest rates regime earlier this year.

South Korea's blue chip Kospi gained 0.57% and the small cap Kosdaq was up almost 1%.

Australia's S&P/ASX 200 rose 0.15% on open.

Futures of mainland China's CSI 300 stood at 3,191 slightly lower than its Tuesday close at 3,195.76.

Overnight in the U.S., all three major indexes fell, with the Dow Jones Industrial Average down 0.25% to 41,503.1, while the S&P 500 fell 0.29% to end at 5,618.26. The Nasdaq Composite fell 0.31% to 17,573.3.

The Dow Jones Industrial Average and the S&P 500 surged to fresh highs during intraday trading before reversing course to close lower.

—CNBC's Hakyung Kim and Samantha Subin contributed to this report.