Japan’s benchmark Nikkei 225 Index is trading 1.5% lower after data showed the country’s industrial output unexpectedly fell.Manufacturing output fell 1.5% in August from a month earlier. Economists had estimated a 0.2% gain.
South Korea also posted a 3.8% drop in factory output for August, marking its worst monthly fall since 2008.
Investors remain on edge over tensions in Hong Kong, where pro-democracy protestors have taken to streets.
Hong Kong’s Hang Seng fell 1.4% on Tuesday, logging its second straight day of declines. It closed down 1.9% on Monday.
Seoul’s Kospi, Singapore’s Straits Times Index and Taiwan’s stock markets are also in negative territory.
The regional benchmark index, MSCI Asia Pacific, is down 0.6% in Tokyo, and is headed for its steepest monthly drop since May last year.
Japan’s weak manufacturing figures come as the country’s prime minister, Shinzo Abe, weighs a second increase to the unpopular sales tax, adding to worries about the state of the economy.
The sales tax increase led Japanese consumers and business to pull back from spending, causing economic growth to shrink sharply.
Aside from factory data, Japan also released mixed retail sales, household spending and unemployment numbers on Tuesday.
Retail sales rose 1.9% in August from a month earlier, above forecasts. However, household spending fell for its fifth straight month by 0.3%.
The jobless rate fell in August, while the availability of jobs stayed at a 22-year high.
Marcel Thieliant, Japan economist at Capital Economics said “today’s data are unlikely to dispel concerns about the pace of recovery from last quarter’s slump”.
“We think the weakness in output since the beginning of the year will take its toll on the job market in coming months,” he added.
“Accordingly, we expect the unemployment rate to climb to 4% by the end of the year.”