Major Asian equities closed mostly lower on the first day of the final trading week for 2015, with the Japanese market advancing, while the South Korean Kospi fell 1 percent and the Shanghai Composite seeing declines of near 2.6 percent.
Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note last week that shares will likely see their "traditional Santa Claus rally over the Christmas/New Year period as investors take advantage of improved valuations, monetary conditions remain easy and new issuance dries up into year end."
However, Oliver warned about the Federal Reserve and a strong dollar "possibly weighing on commodity prices and emerging countries may mean that volatility will remain high."
U.S. crude futures for February delivery were down 44 cents, or 1.15 percent, at $37.67 a barrel in Asian trade, almost on par with the internationally traded Brent futures, which were down 24 cents, or 0.61 percent, at $37.66 a barrel. Last week, U.S. crude futures posted their biggest weekly gain since early October, tacking on 9.7 percent for the holiday-shortened trading week.
But J.P. Morgan Asset Management's chief Asia market strategist, Tai Hui, told CNBC's "Asia Squawk Box" that the huge supply glut in oil is not going to change anytime soon.
"If you look at demand and supply dynamics, it does suggest that oil prices should not be at $30. It should be slightly higher. But the reality again is that OPEC seems to be still very committed to this game to price out its competitors," he said.
Energy plays in Asia finished the session mixed. Shares of Japan's Inpex and Japan Petroleum were up 1.08 and 1.11 percent respectively. In South Korea, S-Oil and SK Innovation were down 3.06 and 2.59 percent respectively.
Chinese energy plays such as CNOOC and Sinopec traded down 1.78 and 3.43 percent respectively. Shares of PetroChina fell 1.86 percent in the afternoon session after reports said the company plans to consolidate its pipelines assets into a single entity to streamline operations.
The Australian market remains closed today. It was closed Friday for the Christmas holiday.
Nikkei gains near 0.6 percent
The Japanese market finished higher, with the main index up 104 points, or 0.56 percent, at 18,873.
Shares of Sharp Corp. jumped 7.27 percent. According to local media reports last week, citing sources close to the matter, Taiwan's Hon Hai Precision Industry, one of the largest suppliers of electronics products, proposed buying the Japanese company for 300 billion yen.
Hon Hai shares closed down 0.74 percent.
Before trading started, Japan's Ministry of Economy, Trade, and Industry (METI) released the country's November industrial output data.
Japan's factory output for the previous month fell 1 percent on-month, lower than a market expectation of a 0.6 percent drop.
Manufacturers, however, remain optimistic over output. Those surveyed by METI said they expect output to rise 0.9 percent in December and 6 percent in January.
Japan's November retail sales fell 1 percent on-year, more than a forecast for a 0.6 percent decline, according to a Reuters poll.
Retail giant and index heavyweight Fast Retailing closed down 1.27 percent.
The yen traded near flat at 120.45 against the dollar.
Kospi in the red, loses over 1 percent
In Korea, the Kospi closed down 1.34 percent at 1,964 in the afternoon.
Shares of Samsung Group companies were mostly trading lower across the board, with Samsung C&T down 4.81 percent at market close.
Last week, reports said Samsung SDI, which primarily makes batteries, will sell 2.6 percent stake in Samsung C&T to comply with cross-shareholding regulations.
Shares of Samsung SDI ended down 3.06 percent.
Samsung Electronics shares finished 1.48 percent lower. Reuters, citing South Korea's Electronic Times, reported that the smartphone maker announced plans for an initial production of about 5 million units of its upcoming Galaxy S7 smartphones.
Meanwhile, shares of Samsung Engineering erased morning losses to close up 5.48 percent in the afternoon session. In a stock exchange filing, the company released details of its contract for an Ultra Low Sulfur Diesel (ULSD) project with Mexico's state-owned oil firm Petroleos Mexicanos (Pemex).
Elsewhere, shares of Daewoo Securities finished in the red, down 1.96 percent after reports that Mirae Asset Group, one of the country's leading asset managers, was selected as the preferred bidder to take over the company. Shares of Mirae were down 1.93 percent.
Chinese markets see afternoon sell-off
Chinese markets tumbled, erasing early gains. The index ended down 2.57 percent at 3,534, with stocks falling almost across the board. The smaller Shenzhen Composite closed 2.17 percent lower.
Chinese B-shares, which are traded both in Shanghai and Shenzhen but are denominated in hard currencies, saw a loss of nearly 8 percent.
Hong Kong's saw a 1.08 percent loss in afternoon trade and closed almost 1 percent lower.
Before trade, the People's Bank of China set the yuan mid-point range at 6.4750 per dollar. The yuan near flat at 6.4763 against the dollar during afternoon trade.
Profits earned by industrial companies in China were down, according to official data released overnight. Reports showed China's industrial profits in November fell for the sixth consecutive month; it was down 1.4 percent on-year.
Data compiled for industrial profits look at large enterprises with annual revenue of more than $3.1 million, according to Reuters.
Mainland resources producers closed down, while mainland brokerages saw sizable sell-off in afternoon trade, finishing down between 3.03 and 5.96 percent.
Overnight, Chinese authorities also approved a proposal to reform China's initial public offering (IPO) listing. Under the current system, companies wanting to list on the stock market must acquire approval from regulators. The reform proposal, which can be in place as early as March next year, shifts toward a registration-based system followed in markets such as the U.S.
On the Hong Kong bourse, shares of China Telecom, one of the biggest telco providers in the country, closed down 1.34 percent. China's anti-corruption watchdog said the company's chairman is being investigated for alleged violation of discipline, without providing further details.
H-shares of China Success Finance Group soared nearly 22 percent and closed over 18 percent higher after the company issued a statement saying it entered a memorandum of understanding with Shun Yang Construction to form a joint venture company for financial services of public infrastructure works.
China Success Finance will contribute approximately 95 million yuan ($14.7 million), representing 20 percent of the total capital contribution, to the venture, the statement said.