Asia markets open December mixed as China factory activity weakens unexpectedly

Asia-Pacific markets opened December mixed Monday as traders parsed fresh manufacturing data from China and rising expectations of a U.S. Federal Reserve rate cut this month.

Traders are pricing in an 87.4% chance of a quarter-point rate cut for the upcoming Fed meeting on Dec. 10, according to the CME FedWatch Tool.

Hong Kong’s Hang Seng Index added 0.81%, while the mainland CSI 300 was up 1.1% to close at 4,576.49.

China’s factory activity unexpectedly contracted in November, according to a private survey released Monday, as soft domestic demand continued to cast a pall over the world’s second-largest economy.

The RatingDog China General Manufacturing PMI, conducted by S&P Global, dropped to 49.9 in November, missing analysts’ expectations of 50.5 in a Reuters poll. A reading above the 50 benchmark level suggests an expansion, while one below that indicates contraction.

The gauge follows official data released Sunday showing China’s factory activity improving slightly to 49.2 in November, but remained in contraction for the eighth consecutive month. Services weakened as the lift from earlier holidays faded.

Hong Kong-listed firms with exposure to digital assets plunged after the People’s Bank of China warned of illegal activities tied to digital currencies and the resurgence of speculation, according to a statement released by the central bank Saturday.

Stocks of Jack Ma-backed Yunfeng Financial and Bright Smart Securities & Commodities Group tumbled more than 7%, while Guotai Junan fell as much as 3%.

Japan’s benchmark Nikkei 225 index fell 1.89% to end at 49,303.28, and the Topix index retreated 1.19% to 3,338.33. Among the bottom movers on the Nikkei 225 index were electrical equipment company Fujikura, down 8.94%, Sumitomo Pharma, which fell 5.86% and Advantest, which declined 4.25%.

South Korea’s Kospi index was down 0.16% at 3,920.37, while the small-cap Kosdaq advanced 1.06% to 922.38.

Australia’s ASX/S&P 200 declined 0.57% to 8,565.2.

India’s Nifty 50 fell 0.15%, and the Sensex index was 0.13% lower.

U.S. equity futures were little changed in early Asian hours after a winning week.

On Friday stateside, Wall Street came back from the Thanksgiving holiday for a shortened trading session. The Nasdaq Composite advanced 0.65% to end the day at 23,365.69, scoring its fifth straight day of gains.

Meanwhile, the S&P 500 gained 0.54% to settle at 6,849.09. The Dow Jones Industrial Average grew 289.30 points, or 0.61%, to finish at 47,716.42.

— CNBC’s Anniek Bao, Sean Conlon and Sarah Min contributed to this report.