China's financial hub of 26 million people told all firms to suspend manufacturing or have people work remotely in a two-stage lockdown over nine days.
The dollar leapt 0.7% against the yen in the wake of the Fed's decision and Powell's remarks, its steepest daily jump in more than two months as the prospect of imminent hikes spooked stock markets and drove bond yields higher.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.2%, falling to its lowest in a month, and Japan's Nikkei skidded 2% to its lowest level since August.
The Fed begins a two-day policy meeting later in the global day, and investors will be anxious for any hints on the timing and pace of rate hikes, as well as about how fast the central bank will shrink its more-than $8 trillion holdings of Treasuries and mortgage debt.
The Nikkei dropped 0.55% to 27,371.11 as of the midday break, with startup investor SoftBank Group being the biggest drag on the index, slipping 3.13%.