Asia-Pacific markets mostly fall on penultimate day of the year

Key Points

• Investors are assessing China's military exercises around Taiwan, after the world's second-largest economy announced new drills surrounding the island Monday.
• Shares of SoftBank fell after it announced a $4 billion deal late Monday to buy data center investment firm DigitalBridge.

Asia-Pacific markets mostly fell Tuesday, after the tech sell-down on Wall Street continued on AI bubble fears.

Nvidia shares dropped more than 1% Monday stateside, giving back some of its more than 5% gain in last week's period. Palantir Technologies and Meta Platforms also suffered losses, as did Oracle.

Japan's Nikkei 225 was down 0.37% to 50,339.48, while the broad-based Topix was 0.51% lower and ended at 3,408.97.

Shares of Softbank Group Corp slipped almost 2%, after the company announced a deal late Monday to buy data center investment firm DigitalBridge for $4 billion as part of its artificial intelligence push.

SoftBank CEO and Chairman Masayoshi Son said the acquisition "will strengthen the foundation for next-generation AI data centers" and advance the firm's vision to become a leading "Artificial Super Intelligence" platform provider. Shares of DigitalBridge jumped about 10% after the announcement.

South Korea's Kospi shed 0.15% and closed at 4,214.17, while the small-cap Kosdaq declined 0.76% to 925.47, leading losses in Asia.

Hong Kong's Hang Seng index bucked the trend and rose 0.86% in the final hour of trade, while the CSI 300 in mainland China was 0.26% higher and ended at 4,651.28.

Investors are assessing China's military exercises around Taiwan, after the world's second-largest economy announced new drills surrounding the island Monday.

Taiwan's President Lai Ching-te said that Taiwan will "act responsibly and not escalate conflict," but also said that the "frequent escalation of military pressure" by China was not something a responsible power should do.

The Taiwan Weighted Index fell 0.36% and finished at 28,707.13, with major tech names like Taiwan Semiconductor Manufacturing Company and Hon Hai falling about 0.65% and 1.3% respectively.

Australia's S&P/ASX 200 fell 0.1% to 8,717.1, after registering gains earlier in the day.

U.S. futures were little changed in early Asian hours.

Overnight in the U.S., the S&P 500 dropped 0.35%, while the Nasdaq Composite shed 0.50%. The Dow Jones Industrial Average pulled back by 0.51%.

Traders will be looking for home price data due Tuesday stateside at 9 a.m. ET, and the Federal Reserve's December meeting minutes at 2 p.m. ET.

—CNBC's Sean Conlon and Fred Imbert contributed to this report.