Japanese stocks sold off on Wednesday, weighed by a stronger yen and after an apparent North Korea missile test that reports said failed.
Reuters, citing Yonhap news agency, reported the isolated nation in the Korean peninsula may have conducted a missile launch with a U.S. military spokesman adding that "a missile appears to have exploded within seconds of launch."
The benchmark tumbled down 2.13 percent or 414.5 points at 19,041.38 while the Topix index dropped 2.12 percent or 33.2 points to 1,530.2. The yen traded at 111.4 to the dollar, weakening from an earlier session high of 111.41, but relatively stronger than levels above 113.00 reached in the previous week.
Analysts reckoned the sell-off on the Nikkei was also spurred with the overhang from a stronger yen.
"There is a growing concern that there could be further depreciation movers for the USD, which could see further yen cross strength," Gavin Perry, managing director at Parry International Trading told CNBC.
Perry explained that the concerns over the dollar are due to the "Fed's dovish comments at the recent rate hike, indicating they are less bullish on U.S. growth and the assumed delay in the Trump fiscal reform package which was expected to boost U.S. growth."
South Korean defense stocks traded mixed, but beat the broader benchmark earlier following the North Korea report. Shares of Firstec rose 1.21 percent, Speco fell 0.4 percent and Victek advanced slipped 1.88 percent.
The Bank of Japan released its January minutes early on Wednesday, showing that board members rejected the idea of raising 10-year government bond yield target in the future to match expected gains in U.S. Treasury yields, Reuters reported.
Japan's exports in February rose 11.3 percent from the previous year, the third straight month of increases signalling the recovery in global demand. Imports rose 1.2 percent in February on-year.
Australia's S&P/ASX 200 closed down 1.56 percent or 90.1 points at 5,684.5, seeing heavy losses in its energy, materials and financials sectors.
Australia's Big Four banks were hit hard, with shares of Australia and New Zealand Banking Group down 2.57 percent, Commonwealth Bank fell 2.03 percent, Westpac slipped 2.42 percent and National Australia Bank was 1.58 percent lower.
The finished down 0.5 percent or 16.2 points at 3,245.4 and Shenzhen composite dropped 0.29 percent or 6.1 points to 2,037.89.
Hong Kong's index declined by 1.35 percent by the afternoon.
U.S. equities had the worst day of the year for stocks on Tuesday, as banks struggled with falling yields and over concerns that President Donald Trump faces legislative roadblocks in passing a healthcare overhaul.
The dropped 1.14 percent to close at 20,668.01, the S&P 500 tumbled 1.24 percent to end at 2,344.02 and the composite dropped 1.83 percent to close at 5,832.53.
Since Trump's presidential victory last November, there have been expectations for deregulation, tax reform and an increase in fiscal spending. But the Trump administration has indicated that healthcare reform would take precedence over tax reform.
House Republicans are expected to vote on repealing and replacing the Affordable Care Act on Thursday with the votes needed for passage in doubt.
The markets also noted comments from Cleveland Federal Reserve President Loretta Mester on Tuesday in the U.S. that if economic data holds up she would support a reduction in the Fed's $4.5 trillion balance sheet.s
Late Tuesday in the U.S., the American Petroleum Institute reported a 4.53 million barrels build in crude stocks at the end of last week, nearly double the expected gain.
was trading at $1,244.36 per ounce, up for its sixth consecutive session and near a three-week high.
The dollar index, which tracks the greenback against a basket of currencies, fell below the 100 handle to 99.67 at 3:10 p.m. HK/SIN.
— Fred Imbert contributed to this report