Japan's August retail sales climbed 2.8% year on year, beating Reuters poll estimates of a 2.3% rise, and up from a revised 2.7% rise in July.

Japanese stocks are set to slump early Monday after ruling party elections raised expectations of further central bank interest rate hikes. Traders will also be closely watching events in the Middle East.

Shigeru Ishiba’s election as leader of Japan’s ruling Liberal Democratic party is expected to put pressure on the country’s stocks on Monday morning after Nikkei 225 futures fell 6 per cent following his victory this week.

Japanese stocks will likely tumble on Monday after Shigeru Ishiba’s surprise victory in the ruling party’s leadership race raised expectations that interest rates will increase.

The equity market will likely have large swings in the near term until there’s more clarity around Ishiba’s policies, according to analysts.