The Nasdaq experiences its worst day since 2022, causing Asia-Pacific markets to tumble; Japan's trade deficit narrows.

• The Nasdaq Composite experienced a 2.8% decline overnight, marking its poorest performance since December 2022.
• Japan's trade surplus increased from 224 billion yen to 1.2 trillion yen.

The Asia-Pacific markets were predicted to decline following the 2.8% overnight drop, which was the worst performance since December 2022.

The tech-heavy index dropped 2.77% to 17,996.92, with investors favoring rate-sensitive stocks over big tech names, as optimism on possible rate cuts following Fed Chair Jerome Powell's caution on keeping rates higher for longer continued.

Over in Asia, investors weighed Japan's latest trade data.

In June, Japan's exports increased by 5.4% compared to the same month the previous year, although this was a significant decrease from the 13.5% growth recorded in May. Meanwhile, imports grew by 3.2% year on year in June, which was also a decline from the 9.5% increase seen in May. Despite these figures, both exports and imports fell short of Reuters' expectations, which were 6.4% and 9.3% respectively.

Japan's trade surplus increased from 224 billion yen to 1.2 trillion yen.

The Nikkei 225 in Japan dropped 1.32%, and the Topix also fell by 1%.

While the Kospi decreased by 1.27%, the Kosdaq experienced a larger decline of 1.48%.

The Australian stock market index slightly decreased, as investors anticipate the release of employment figures later today.

The HSI's last close of 17,739.41 was higher than Hong Kong's futures at 17,685.

In the U.S., the Dow Jones Industrial Average gained 243.60 points, or 0.59%, to finish at 41,198.08. This marked the first time the index closed above 41,000. The S&P 500 lost 1.39%, with the information technology and communication services industries being the weakest performers in the session.

—CNBC's Alex Harring and Pia Singh contributed to this report.