At 10:30 (AEST), the benchmark ASX 200 index was down 29.50 points or 0.43 percent at 6,797.60, while the broader All Ordinaries index was down 29.10 points or 0.41 percent at 7,049.90.
U.S. share markets were mixed on Tuesday as investors eyed the upcoming policy decision from the U.S. Federal Reserve. The Dow Jones finished lower by 0.40 percent, the S&P 500 was lower by 0.20 percent while the Nasdaq gained 0.10 percent.
"Trading was muted overnight while markets await the latest views from central banks," CMC Markets chief market strategist Michael McCarthy said.
"While no adjustments to interest rates are expected, the messaging around inflation and the future course of interest rates is crucial to all asset classes."
Meanwhile, industrial commodities were under pressure as vaccine distribution was suspended in Europe. Crude oil and iron ore prices were both lower.
In the financial space, the big banks were mixed with Commonwealth Bank up (0.44 percent), National Australia Bank down (0.15 percent), Westpac Bank up (0.02 percent) and ANZ down (0.11 percent).
Mining stocks varied with BHP down (1.00 percent), Rio Tinto down (1.26 percent), Fortescue Metals up (0.24 percent), and gold miner Newcrest down (1.29 percent).
The country's oil and gas producers slumped with Oil Search down (1.12 percent), Santos down (0.69 percent) and Woodside Petroleum down (0.91 percent).
Australia's largest supermarkets slipped with Coles down (0.38 percent), and Woolworths down (0.27 percent).
Meanwhile telecommunications giant Telstra surged (0.80 percent), the national carrier Qantas slumped (1.10 percent) and biomedical firm CSL dipped (0.28 percent).
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