Nikkei leads declines in Asia; China's inflation falls short of forecast

US nonfarm payrolls increased by 142,000, falling short of the Dow Jones estimate of a 161,000 gain.

However, the unemployment rate ticked down to 4.2 percent, aligning with forecasts.

In Asia, investors reviewed Japan’s revised GDP figure for the second quarter and China’s consumer price index report.

Japan’s Gross Domestic Product (GDP) for the second quarter grew at an annualized rate of 2.9 percent, missing the 3.2 percent forecast by Reuters economists and the preliminary estimate of 3.1 percent.

This slower growth may limit the Bank of Japan’s ability to raise interest rates.

China’s inflation rate rose by 0.6 percent year-on-year (YoY), below the 0.7 percent expected by Reuters, while the monthly consumer price index (CPI) increased by 0.4 percent, also lower than the 0.5 percent forecast.

The Nikkei 225 fell by 2.14 percent, and the broader Topix index decreased by 1.99 percent.

The Japanese yen weakened by 0.3 percent against the US dollar, reaching 142.71, but remained above the nine-month low hit on Friday.

Yen traders are closely watching equities as risk aversion grows, with the unwinding of the yen carry trade expected to continue.

Kathy Lien, managing director of FX strategy at BK Asset Management, anticipates potential periods of aggressive selling in equities this month, according to CNBC’s “Squawk Box Asia.”

Lien also expects some periods of aggressive selling in equities this month, as per reports.

In South Korea, the Kospi dropped by 0.88 percent, while the small-cap Kosdaq gained 0.37 percent.

Australia’s S&P/ASX 200 fell by 0.7 percent.

In Hong Kong, the Hang Seng index declined by 1.93 percent, and the mainland Chinese CSI 300 slipped by 1.09 percent.

Early Monday, Midea Group, a Chinese electrical appliance manufacturer, announced a listing for 492.1 million shares in Hong Kong, priced between HK$52 and HK$54.80 per share.

At the top end, this offering would be valued at HK$26.97 billion ($3.46 billion), making it Hong Kong’s largest listing in over three years.

On Friday, the S&P 500 experienced its worst week since March 2023, while the tech-heavy Nasdaq Composite had its worst week since March 2022.

During Friday’s session, the S&P 500 fell by 1.73 percent, the Nasdaq declined by 2.55 percent, and the Dow Jones Industrial Average dropped by 1.01 percent.