SINGAPORE — Shares in Asia-Pacific struggled for direction in Tuesday trade as the Reserve Bank of Australia announced a larger-than-expected interest rate decision.
Australia’s S&P/ASX 200 declined 1.44%, leading losses regionally as shares of major banks dropped: Commonwealth Bank of Australia shed 2.08%, Westpac slipped 1.71% and National Australia Bank slid 2.6%.
The Reserve Bank of Australia unexpectedly announced a 50 basis points increase in the cash rate to 0.85%. Analysts had been expecting a rate hike of 25 basis points or 40 basis points, according to Reuters.
The Australian dollar momentarily jumped as high as $0.7245 but later retreated from those levels, last trading at $0.7186.
Mainland Chinese stocks were mixed, with the Shanghai Composite up 0.33% and Shenzhen Component declining slightly.
Hong Kong’s Hang Seng index slipped 0.27%.
Over in South Korea, the Kospi fell 1.3%.
The Nikkei 225 in Japan advanced 0.42% while the Topix index climbed 0.7%.
MSCI’s broadest index of Asia-Pacific stocks outside Japan traded 0.87% lower.
Tuesday’s moves in Asia-Pacific markets came as the benchmark U.S. Treasury 10-year yield continued to hover above the 3% level, last sitting at 3.0547%.
“I think it’s still way too early to say that markets have bottomed,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, told news “Street Signs Asia” on Tuesday. “If you’re looking at the short-term, I’m pretty cautious. I think we could see more downside.”
“We’ve seen bond yields pushing up again overnight or in fact, for the last week or so they’ve been pushing higher again. Yes, there’s signs of a potential peak in U.S. inflation but other parts of the world, it’s more tenuous and I’d rather see the oil price decisively top out before I get more confident about saying inflation has peaked as well,” Oliver said.
Overnight on Wall Street, the S&P 500 climbed 0.31% to 4,121.43. The Dow Jones Industrial Average edged 16.08 points higher, or less than 0.1%, to 32,915.78. The tech-heavy Nasdaq Composite rose 0.4% to 12,061.37.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 102.655 after a recent bounce from below 102.
The Japanese yen traded at 132.90 per dollar, still weaker than levels below 128 seen against the greenback last week.
Oil prices were higher in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 0.62% to $120.25 per barrel. U.S. crude futures climbed 0.68% to $119.31 per barrel.
Copyright © Times of London © 2021