The "Santa Claus rally" got off to a good start but US stocks then fell across the board on Friday, with the S&P 500 and the Nasdaq both dropping more than one percent.
Tech stocks led the way, with Elon Musk's electric car giant Tesla closing around five percent lower and AI chipmaker Nvidia shedding around two percent.
Weighing on investor sentiment were worries about the pace of US interest rate cuts and possible higher import tariffs under incoming US president Donald Trump.
"As US stock markets concluded with a downturn on Friday, Asia-Pacific markets are bracing for a slippery penultimate trading day of 2024," said Stephen Innes at SPI Asset Management.
"With US (bond) yields climbing and liquidity essentially non-existent, there's always the potential for outsized moves. This comes during a critical phase of year-end rebalancing, intensified by hefty equity positions across portfolios," Innes said in a note.
In Tokyo, the Nikkei was down 0.75 percent at 40,020.00 points on the last day of trading until January 6.
The yen was little changed after hitting 158.08 against the dollar on Thursday, the lowest in almost six months.
That came after Bank of Japan governor Kazuo Ueda failed to give a clear signal on a possible interest rate increase next month.
In Seoul, Jeju Air shares tumbled more than eight percent after one of its planes crashed in South Korea on Sunday, killing all but two of the 181 people on board.
South Korea's transport ministry said on Monday it was "reviewing plans to conduct a special inspection on (Boeing) B737-800 aircraft" after the crash.
South Korea was also hit with further political turmoil, with authorities issuing an arrest warrant for suspended President Yoon Suk Yeol.
Yoon briefly imposed martial law this month and was then impeachment by parliament. Lawmakers also impeached his acting successor Han Duck-soo last week.
Chinese stocks also opened lower on Monday, with the benchmark Shanghai Composite Index down 0.09 percent at 3,397.12.
China's purchasing managers' index (PMI) for manufacturing was due on Tuesday. The reading was expected to stay at 50.3, above the 50 line dividing expansion and contraction, according to Bloomberg.
Key figures around 0300 GMT
Tokyo - Nikkei 225: DOWN 0.75 percent at 40,020.00 points
Hong Kong - Hang Seng Index: DOWN 0.40 percent at 20,001.00
Shanghai - Composite: DOWN 0.1 percent at 3,397.12
Euro/dollar: DOWN at $1.0423 from $1.0429 on Friday
Pound/dollar: DOWN at $1.2577 from $1.2579
Dollar/yen: DOWN at 157.82 yen from 157.89 yen
Euro/pound: UP at 82.88 pence from 82.87 pence
West Texas Intermediate: UP at $70.63 per barrel
Brent North Sea Crude: UP at $74.23 per barrel
