Asian stock markets mostly fall after weak China factory data, await Thursday's Fed decision

MarketsAssociated Press

Asian stocks were mostly lower Monday after China reported weak factory output and as investors looked ahead to a U.S. Federal Reserve decision this week on whether to raise interest rates.

KEEPING SCORE: Tokyo's Nikkei 225 fell 1.2 percent to 18,045.60 and China's Shanghai Composite Index lost 2.3 percent to 3,126.35. South Korea's Kospi shed 0.7 percent to 1,928.13. Hong Kong's Hang Seng declined 0.3 percent to 21,447.19. Taiwan's index fell while markets in Southeast Asia were mixed. Australia's S&P/ASX 200 rose 0.1 percent to 5,074.70.

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CHINESE MANUFACTURING: Factory output in August grew by a disappointing 6.1 percent, prompting expectations Beijing will launch new stimulus measures for its cooling economy. Growth was below forecasts and analysts said even the level reported was due to comparison with an unusually weak period a year earlier. That came after August exports fell 5.5 percent. The latest data "do cast doubts over the underlying strength of industrial activity," said UBS in a report.

US RATES: Traders were focused on Thursday's Federal Reserve decision, where board members have the option of raising interest rates for the first time since 2008 or holding off but signaling their intention to tighten access to credit. Some analysts suggest China's economic weakening and uncertainty about U.S. inflation might prompt the Fed to postpone action. But the Fed deputy chairman, Stanley Fisher, said two weeks ago he still saw a "pretty strong case" for raising rates this month.

ANALYST COMMENT: "Trader thinking this week will be dominated by Thursday morning's Fed decision. Although we are now only four days out from the decision, there is little sign of a market consensus developing, either on what the Fed will do or on how markets will react if they do lift rates," said Ric Spooner of CMC Markets in a report. "Any unexpected results on this week's release of U.S. retail sales, industrial production or CPI data could influence thinking on the Fed decision and roil markets."

WALL STREET: Stocks ended moderately higher Friday after overcoming a few early stumbles. Energy stocks didn't join the advance and fell along with the price of oil. The Dow Jones industrial average rose 102.69 points, or 0.6 percent, to 16,433.09. The Standard & Poor's 500 index gained 8.76 points, or 0.5 percent, to close at 1,961.05. The Nasdaq composite climbed 26.09 points, or 0.5 percent, to 4,822.34.

ENERGY: Benchmark U.S. crude fell 18 cents to $44.45 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.29 on Friday to close at $44.63. Brent crude, used to price international oils, fell 33 cents to $49.56 in London. It lost 84 cents in the previous session to close at $49.89.

CURRENCIES: The dollar weakened to 120.44 yen from Friday's 120.58 yen. The euro edged up to $1.1353 from the previous session's $1.1335.