Asia-Pacific markets experienced declines on the last trading day of the year, which was shortened due to holidays.

In Australia, the S&P/ASX 200 saw a marginal drop of 0.03%, closing at 8,714.3.

Hong Kong’s Hang Seng index slipped by 0.87%, ending at 25,630.54, while the mainland’s CSI 300 fell by 0.44%. Despite these setbacks, China’s economy showed signs of improvement as factory activity grew in December for the first time since March, surpassing expectations as per official data released on Wednesday.

The manufacturing purchasing managers index climbed to 50.1 in December, exceeding the 49.2 predicted by Reuters-polled economists and rising from November’s 49.2. Any reading above 50 indicates expansion.

The MSCI All Country World Index, which measures the performance of over 2,500 large and mid-cap equities from developed and emerging markets, has climbed over 21% since the start of the year, hitting a record high of 1,024.29 on Dec. 26, data from LSEG showed.

Japan and South Korea are shut for the day.

U.S. equity futures were flat in early Asian hours.

Overnight in the U.S., the S&P 500 fell modestly, notching a third consecutive losing session. The broad market index lost 0.14% and closed at 6,896.24, while the Nasdaq Composite slipped 0.24% and settled at 23,419.08. The Dow Jones Industrial Average shed 0.20%, and ended at 48,367.06.

The three major averages have slumped to start the week, dragged down by losses in tech. Nvidia posted back-to-back losing sessions, as did fellow AI play Palantir Technologies.

—CNBC’s Lim Hui Jie, Sean Conlon and Liz Napolitano contributed to this report.