Asia: Stocks lower following negative Chinese data and drop in oil prices

Asian stocks were lower on Tuesday following worse-than-expected data from China and continuing concerns about falling oil prices.

Hong Kong’s Hang Seng index fell 1.55%, after news that Chinese factory output contracted more than expected this month.

HSBC’s China manufacturing sector purchasing managers’ index (PMI) declined from the break-even point of 50 in November to 49.5 in December, worse than the consensus forecast of 49.8.

However, Shanghai stocks were up 2.31%, due to expectations that Chinese policymakers will respond to the weakness with further rate cuts or a reduction in bank's reserve requirement ratios.

In Japan, the Nikkei 225 was down 2% despite a slight improvement in the nation’s manufacturing PMI to 52.1 from 52 last month.

Like equities in the rest of the world, Japanese stocks reacted negatively to another sharp drop in Brent crude, to $59.18 per barrel, amid reports Iran has lowered its January prices for oil shipments to Asia. This was the first time since July 2009 that Brent crude fell below $60.

Iran’s move follows the recent trend of major Gulf producers cutting their prices for shipments to Asia in January in a bid to preserve their market share.