Asian equities sank into the red on Wednesday, as less-than-stellar corporate results in Sydney and an unimpressive lead from Wall Street took a toll on trading sentiment. Meanwhile, Chinese shares turned negative in the final hour of trade after enjoying a brief reprieve in the morning session from the previous day's sell-off.
Markets in Japan remain closed for the Constitution Day and will resume trade on Thursday.
Overnight, U.S. shares shaved off about 1 percent as investors eyed higher bond yields and an unexpectedly wide March U.S. trade deficit, which sparked concerns about economic growth for the first quarter.
The tech-heavy Nasdaq underperformed, falling 1.6 percent to close below the 5,000 mark. With the blue-chip Dow and the S&P 500 losing 0.8 and 1.2 percent, respectively, all three major indexes failed to hold above psychologically key levels, closing below their 50-day moving averages.
Mainland markets fall
After wavering between gains and losses, China's Shanghai Composite index turned negative in the final hour of trade, ending down 1.6 percent at its lowest level since April 21. This comes on the back of a 4.06 percent slump in the previous session, which marked the bourse's biggest single-day loss in nearly four months, after local media reported that several brokerage houses are implementing stricter margin financing rules.
Earlier in the day, the Shanghai bourse traded on the plus side following data that showed activity in the services sector growing at its fastest pace this year. The HSBC/Markit services purchasing managers' index (PMI) rose to a four-month high of 52.9 in April, slightly higher than March's 52.3 and comfortably above the 50-point level that separates expansion from contraction.
Among the most active stocks, China Shipbuilding erased 7.7 percent, while China State Construction Engineering and Agricultural Bank of China shaved off 2.9 and 1.1 percent each.
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Markets in the world's second-biggest economy have put up a blistering rally since last November due to Chinese stimulus action, prompting security regulators to warn new stock investors to "act according to their ability" last month. According to market watchers, the world-beating rally in China may be in for a breather and investors "ought to be careful."
"Valuation wise, the Chinese stock market looks stretched after running on the back of euphoria and expectations that the central bank will cut interest rates. There is a lot of euphoria and that's what worries me," Vasu Menon, vice president of Wealth Management OCBC Singapore, told CNBC Asia's "Squawk Box."
Hong Kong's Hang Seng index tracked stock movements in the mainland, dropping 0.4 percent amid choppy trade late Wednesday.
HSBC eased 0.6 percent, a day after the British lender reported a 4 percent rise in pretax profit for the March quarter.
ASX tanks 2.3%
Australia's S&P ASX 200 index crashed to a three-month low, as the sell-off in banking shares worsened after Commonwealth Bank of Australia announced flat third-quarter cash earnings before the market open.
Shares of the country's biggest lender by market value slumped 5.9 percent, while National Australia Bank and Westpac closed down 2.7 and 3.7 percent each. Australia and New Zealand Banking Group succumbed to the downward pressure in the afternoon session, widening losses to 2.7 percent from an earlier 0.5 percent.
Financials were also weighed down by speculation that the Reserve Bank of Australia (RBA) may be putting a stop to its easing cycle, after the central bank put out surprisingly upbeat comments on Tuesday.
Market bellwether BHP Billiton is in focus as shareholders gather in Perth and London to vote on the miner's plan to demerge into two new entities. Share prices of the mining giant reversed a higher open to shed 0.6 percent.
Meanwhile, Australia's retail sales rose 0.3 percent in March, missing expectations for an increase of 0.4 percent from the previous month. As such, retailers were lackluster, with Harvey Norman and JB Hi-Fi losing 2.1 and 1.4 percent each. Supermarket operator Woolworths slid 5 percent after posting its first quarterly sales decline in more than 2 decades.
Kospi loses 1.3%
South Korea's key Kospi index reopens for trade on a dismal note, as declines offshore and profit-taking took the bourse down to a three-week trough. The Seoul index was closed on Tuesday for Children's Day.
Brokerages were among the biggest losers, with Daewoo Securities and Samsung Securities plunging 11.8 and 9.5 percent, respectively. Tech-related plays also underperformed, mirroring losses in their U.S. counterparts; South Korea's top weighted stock Samsung Electronics closed down 2.7 percent, while SK Hynix declined 3.2 percent.
Hyundai Motor, which is in the news for recalling 2,580 units of its 2015 Accent model, gave up earlier gains to sag 0.3 percent.
After falling short of market expectations with a first-quarter net income of 442.8 billion ($409.5 million), mobile carrier SK Telecom finished 3.6 percent lower.
Noble Group in focus
Singapore-listed Noble Group tumbled 3.4 percent despite announcing a first-quarter net profit of $106.6 million late Tuesday. The first-quarter results, which came two days earlier than expected, marked a turnaround from a loss of $240 million in the previous three months due to some $400 million in writedowns and other charges.
The Hong Kong-based commodity trader also included more disclosures in the quarterly earnings, normally reserved for annual results.
"Following recent corporate governance concerns, Noble enhanced its quarterly disclosures and clarified that unrealized gain from fair value changes in the quarter were miniscule. Valuation at 6.3x 2015E P/E implies a significant discount to peers... and concerns should subside gradually with management's pledge to improve," Barclays analysts, who maintained an overweight rating on the stock, wrote in a note.
Noble's share price has shaved off 22 percent year to date, after Iceberg Research and U.S. short-seller Muddy Waters questioned the firm's accounting practices earlier in the year.