Nikkei 225 drop, China PMI on tap, Ishiba election

Japan’s Nikkei 225 tumbled over 4% Monday, while Australia stocks hit a fresh high ahead of key economic data from China.

Japan’s August retail sales climbed 2.8% year on year, beating Reuters poll estimates of a 2.3% rise, and up from a revised 2.7% rise in July. The broad-based Topix saw a smaller loss of 3.13%.

The Japanese yen weakened 0.29% against the dollar, trading at 142.63.

The moves in Japanese markets come as investors digest Shigeru Ishiba’s victory in the Liberal Democratic Party elections last Friday. He will succeed Fumio Kishida as Japan’s prime minister.

Former defense minister Shigeru Ishiba has triumphed in his fifth bid to become Japan’s prime minister.

Separately, China will release its official purchasing managers’ index numbers for September, with economists polled by Reuters expecting the manufacturing PMI to come in at 49.5, a softer contraction compared to August’s 49.1.

The Caixin PMI survey, which is a private survey compiled by S&P Global, will also be released Monday.

Australia’s S&P/ASX 200 climbed 0.62%, breaching its all-time high of 8,246.2.

South Korea’s Kospi fell 0.54%, and the small cap Kosdaq slipped 0.49%

Hong Kong’s Hang Seng index futures were at 20,910, lower than the HSI’s last close of 20,632.30.

Overnight in the U.S., the Dow Jones Industrial Average rose to a new high on Friday as traders assessed fresh data that showed to more progress on reining in inflation.

The 30-stock Dow added 0.33%, ending at 42,313.00. The S&P 500 ticked down 0.13%, while the Nasdaq Composite lost 0.39%.

This comes as traders assess encouraging August inflation data, which saw the personal consumption expenditures price index — the Federal Reserve’s favored measure of inflation — increasing 0.1%, matching expectations from economists polled by Dow Jones. 

PCE climbed at an annualized pace of 2.2%, below the 2.3% forecast.

—CNBC’s Brian Evans and Pia Singh contributed to this report.