Concerns over a looming trade war between the world's two largest economies continued to linger after U.S. President Donald Trump said on Monday that he had asked the U.S. Trade Representative to identify $200 billion in Chinese goods that could be subject to additional tariffs.
China said in response that it would take counter measures against the U.S. if the latter went ahead with issuing the list of extra tariffs.
"Markets have been bracing for a not ideal outcome ... so it's been a big dampening impact on sentiment," Steven Wieting, chief investment strategist at Citi Private Bank, told CNBC's "Squawk Box."
"Generally speaking, the world has treated this trade war as an unknown negative that's impacting markets widely when it's likely to be much more specific to certain companies and have significant impact — and the U.S. is far from immune to the negatives here," Wieting added.
Even with Wednesday's gains, major Asian markets were still down on the week. China's benchmark equity index was down 3.8 percent this week while the Shenzhen composite was lower by more than 5 percent for the week. Japan's Nikkei 225 was down more than 2 percent in the week.
U.S. stocks finished lower, but those declines were slighter than the sharp falls seen during the Asian session on Tuesday: The Dow Jones industrial average fell 1.15 percent, or 287.26 points, to close at 24,700.21, erasing all its gains made this year. Other U.S. stock indexes recorded smaller declines.
Markets in the region had sold off in the previous session, led by losses in China. The Shanghai composite tumbled 3.82 percent and closing below the key 3,000 mark and the Shenzhen composite fell 5.77 percent on Tuesday.
Concerns over the trade dispute between the world's two largest economies also saw investors turn to safe haven assets in the previous session, with U.S. Treasury prices higher on Tuesday. On Wednesday, however, the yield on the 10-year U.S. Treasury note ticked higher to last stand at 2.9 percent. Bond yields move inversely to prices.
In currencies, the dollar firmed against the safe-haven yen at 110.22 at 3:13 p.m. HK/SIN. The greenback had slipped below the 110 handle in the last session.
The dollar index, which tracks the greenback against a basket of currencies, rose to 95.148.
In individual movers, shares of Australia's Telstra dropped 4.81 percent after the telco on Wednesday announced plans to reduce employee and contractor headcount by 8,000. The company also said it would create a standalone business unit, called Telstra InfraCo, that will include Telstra's fixed network infrastructure.
ZTE shares traded in Hong Kong rose more than 14 percent by 3:09 p.m. HK/SIN, paring some of Tuesday's declines after the U.S. Senate passed a defense bill that targeted the Chinese telecommunication equipment maker. The company on Wednesday clarified that the bill was not yet law as it had yet to be reconciled with a version passed by the U.S. House of Representatives. ZTE's Shenzhen-listed shares, however, were down 10 percent on Wednesday.