Australian stocks on Wednesday retreated from the previous day's four-and-a-half-year high after manufacturing data suggested China's economic recovery may not be on a solid footing, while the Nikkei 225 extended losses on weak earnings reports.
Financial markets across Asia including Seoul, Hong Kong and Shanghai were shut for the May Day holiday and will resume trade Thursday.
The official Chinese Purchasing Managers' Index (PMI) for April fell to 50.6 from March's eleven-month high of 50.9. A key reason for the drop was falling new orders, which reflect negative expectations from companies.
"The Chinese economy is starting to slow down. On the other side, industrial production in Korea was also weaker so economic data overall is starting to weaken," said Kumar Palghat, director of Kapstream Capital.
(Read More: Fall in New Factory Orders to Trigger China Action?)
However, he believes the global liquidity rush will offset any losses stemming from weak data.
"There are 7 or 8 things we were worried about last quarter, including the U.S. sequester, Italian elections, and Cyprus. Each one of these things that we thought would have given equity markets a correction came and went, but you're still getting plenty of stimulus from central banks so that's why equity markets are going up," Palghat said.