Asian markets were mixed on the first trading day of the week after Japan released worse-than-expected third quarter growth data and as mainland markets welcomed the launch of the keenly-anticipated Shanghai-Hong Kong stock connect.
Japan's economy shrank in the third quarter, data showed on Monday, defying expectations for growth. Gross domestic product shrank an annualized 1.6 percent in the three months through September, a second straight drop -- matching the textbook definition of a recession. Unadjusted for price changes, the economy contracted an annualized 3 percent, the Cabinet Office said. Japanese stocks slumped. The economy contracted 7.3 percent in the second quarter.
Tokyo skids 2.6%
Japan's Nikkei 225 index tumbled to a one-week low of 17,037 after grim data showed the country's economy unexpectedly slipped into recession. After hitting a seven-year high of 117.04 earlier in the morning session, the dollar-yen pair retreated to 115.7 as of 1120 SIN/HK.
"Dollar-yen has been moving recently in close relationship with the (Japanese equities) so the Nikkei's fall knocked the pair from its highs, "Masafumi Yamamoto, Tokyo-based market strategist at Praevidential Strategy, told Reuters.
While exports and consumer spending returned to gains last quarter, they weren’t strong enough to offset the impact of a slump in the stocks of unsold goods -- a sign that companies were unwilling to boost production. Residential investment was another soft spot, while government spending had a positive impact on GDP.