Japanese and Australian shares edged lower Thursday. Banks were the main movers in both bourses.

Nearly all financial markets in the region, except for Tokyo and Sydney, were closed for a Labor Day holiday.

The Nikkei declined with Mitsubishi UFJ lower, and other banks falling as well. Japanese brewer Kirin Holdings fell after a 46 percent drop in quarterly profit, which came despite a double-digit rise in sales.

In Australia, the share benchmark declined amid some banking share weakness. But Westpac, Australia's No. 4 lender, edged up after a 10 percent rise in first-half core profit.

And in the U.S., the Federal Reserve, as anticipated, cut the federal funds rate by another 25 basis points yesterday, bringing it down to just 2 percent. The federal funds rate is the interest rate at which banks loan to each other. The Fed is hoping that cheaper credit will boost the flailing economy by encouraging businesses to borrow more money for growth, and helping U.S. homeowners refinance their mortgages at lower interest rates.

The goal at this point, say economists, is to keep the U.S. economic downturn from being too severe. But worries about inflation also persist, and the Fed has signaled that this will be the last rate cut for awhile, as long as the markets remain steady.

The impact of the Fed's cut on Asian markets may not be fully seen until next week, after several holidays from now through Monday are keeping various Asian markets closed.

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