Asian equity markets were mixed on Monday, with data from the world's second largest economy in focus. But volumes in the region were light with Hong Kong, Taiwan and South Korea shut for the Mid-Autumn Festival.
Chinese industrial profits declined 8.8 percent on year in August, their sharpest pace since 2011, according to the National Statistics Bureau. Analysts said the report wasn't surprising given the string of recent weak economic indicators, such as tumbling producer price inflation and factory activity.
"Slowing profit growth in China's midstream sectors is reflective of output price declines deteriorating at a faster pace than the input price. Headline profit growth is unlikely to improve in the short term and the downstream sectors will be affected in the long-run if economic growth continues to slide and drag on consumption. Further fiscal stimulus is expected in Q4 given the weak Q3 performance," noted Yating Xu, economist at IHS Global Insight.
Attention now falls on China's official September purchasing manufacturing managers' index (PMI) and the final Caixin/Markit PMI, both due on Thursday. The reports will be closely watched after Caixin's preliminary reading for September touched a six-and-a-half-year low of 47, well below the key 50-level. Meanwhile, U.S. nonfarm payrolls data for September is expected on Friday.
Investors also continued to react to comments by Federal Reserve Chair Janet Yellen last week. In a speech after the U.S. market close on Thursday, Yellen said she personally anticipated an interest rate hike this year.
A mixed handover from Wall Street also dampened sentiment in Asia. The Nasdaq Composite closed down 1 percent on Friday, pressured by decline of nearly 5 percent in the iShares Nasdaq Biotechnology ETF (IBB), while the S&P 500 ended flat and the Dow Jones Industrial Average closed up 100 points.