Asia report: Investors await China-US trade news as Aussie banks rocket

Asian markets were mixed on Tuesday as some investors awaited Donald Trump's State of the Union address and any hints it might hold to the progress of trade talks with China, while indexes down-under were buoyed as Australian banks enjoyed a lucky escape from increased regulation.

Dean Popplewell, vice president of market analysis at Oanda, said market focus "is likely to be on any indications on how Sino-U.S trade negotiations are going, anything positive on the trade news front should provide support for the greenback".

Japan's Nikkei 225 broke its three-day winning streak as it dropped by 0.19% to 20,844.45 and the yen dropped by 0.06% against the US dollar to JPY109.96.

Yahoo Japan made strong gains of over 9% after a strong earnings reports, though the index was dragged down by Uniqlo operator Fast Retailing and other market heavyweights which "extended their losses due to concerns over their business outlook", according to Shinichi Yamamoto, broker at Okasan Securities.

Yamamoto added that selling pressure tends to emerge whenever the Nikkei index approaches the 21,000 benchmark, while investors are also holding back until after US President Donald Trump's State of the Union address on Tuesday.

Markets in China, Hong Kong and South Korea remained closed during a week of Lunar New Year celebrations.

Brent Crude was up 0.65% at $62.92, while WTI climbed 1.02% to $55.12.

Australia's S&P/ASX 200 climbed by 1.95% to 6,005.91 after the nation's 'big four' banks received the "best possible" outcome from a year-long inquiry into misconduct in the finance sector.

Though dozens of rule changes have been recommended by the report, investors breathed a sigh of relief that sent Commonwealth Bank of Australia and National Australia Bank up by around 4%, while Australia and New Zealand Banking Group and Westpac were up by roughly 7%.

A note from UBS said: "It is possible that the banks may face criminal proceedings but we do not believe that any of the 76 recommendations by themselves will have a material financial impact."

The news had a knock-on effect in New Zealand, where the S&P/NZX 50 jumped 1.05% to 9,073.72 as dual-listed lenders Australia & New Zealand Banking Group, Westpac and AMP all rallied ahead of the market's closure for is Waitangi Day on Wednesday.

The Australian dollar was up 0.22% against the greenback at AU$1.38, while New Zealand's dollar climbed by 0.09% to NZ$1.45.