Asia: Equity markets struggle for direction as concerns over China persist

Asian equity markets struggled for direction on Tuesday, with investors avoided big bets as they awaited the outcome of a Chinese five-year economic planning summit.

This week sees China's Communist holding its Central Committee, during which Beijing's officials are expected to lay out their economic blueprint for the next five years.

The Shanghai Composite Index gained 0.14%, while Hong Kong's Hang Seng edged 0.11% higher, as investors' uncertainty largely offset a strong performance in China's defence sector, which surged 7.2% in the session, according to a classification by Citic Securities.

"With economic weakness in China likely to drag into the fourth quarter, sentiment remains bearish for the China markets as market participants come to terms with the fact that growth targets in China’s next five year plan may be played down," said FXTM research analyst Lukman Otunuga.

There was better news, however, on the economic data front, where a report showed a smaller-than-expected decline in industrial profits, which fell 0.1% in September compared with an 8.8% slump in the previous month.

The attention will now turn across the Pacific, where Chinese e-commerce giant Alibaba is set to report quarterly earnings ahead of the opening bell on Wall Street, while Apple's results will be closely monitored once they are released after the close.

A positive performance from Alibaba would suggest that Chinese consumers have continued to shop, despite a slowdown in the economy, analysts said.

Over in Japan, the Nikkei Stock Average fell 0.9% as market participants in Asia's second-largest economy remained edgy ahead of the Bank of Japan's meeting on Friday.

"There is a distinct reluctance on the behalf of investors to get overly involved in the present equity rally," said Brenda Kelly, analyst at London Capital Group.

"The fact that we have two central bank meetings this week, the FOMC and the BOJ is adding a certain element of prudence despite the fact that few expect a rate hike from the Fed, and also that akin to last year that Japan may well extend its current quantitative easing programme in a bid to achieve its inflation target."

Elsewhere, Australia's S&P/ASX 200 and South Korea's Kospi declined 0.03% and 0.17% respectively, with the former not helped by the prospect of a further decline in copper prices.

On the currencies front, the Japanese yen reversed earlier losses to climb 0.42% against the dollar, while the Australian dollar slid 0.08% against its American counterpart.