Asia report: Markets mixed as Australia stands pat on interest rates

Stock markets in the Asia-Pacific region finished in a mixed state on Tuesday, influenced by hopes for a potential interest rate cut by the US Federal Reserve.

South Korean stocks led the risers, buoyed by positive sentiment from gains in Wall Street the previous day.

The Reserve Bank of Australia was also in focus, after the central bank left its cash rate at 4.35% for the fourth consecutive meeting.

“On the back of the recent uptick in quarterly inflation, many players were looking for a more hawkish stance from the bank,” said James Harte at TickMill Group.

“However, the bank stuck to a broadly neutral message on rates warning it was ruling nothing in or out on rates and would continue to monitor inflation.”

Harte said that despite the tone of the meeting and the selling seen in the Aussie dollar, hawkish risks remained.

“Commenting during the press conference after the meeting, RBA governor [Michele] Bullock warned that the bank had considered hiking at this meeting, but ultimately decided policy was in a strong enough place to deal with inflation as is.

“However, she did say that there were upside risks which need to be monitored going forward.”

Markets mixed as investors watch for interest rate clues

In Japan, the Nikkei 225 rose 1.57% to reach 38,835.10, while the Topix index increased by 0.65%, closing at 2,746.22.

Leading the gainers on Tokyo’s benchmark was Rakuten, up 6.04%, followed by Nomura with a 5.86% rise, and Fujikura, which added 5.74%.

China's Shanghai Composite edged up 0.22% to 3,147.74, whereas the Shenzhen Component experienced a slight decline of 0.09% to settle at 9,770.94.

Notable gainers in Shanghai included Beijing Piesat Information Technology and Chengdu Haoneng Technology, which advanced 11.27% and 10.04%, respectively.

Meanwhile, Hong Kong's Hang Seng Index faced a downturn, slipping by 0.53% to 18,479.37.

Leading decliners in the special administrative were NetEase, down 4.98%; Alibaba Health Information Technology, off 4.09%; and Meituan, which lost 3.99%.

South Korea's Kospi index was the top gainer, jumping 2.16% to 2,734.36, with top gainers including Kumyang and Hanwha Solutions, which rose by a respective 9.24% and 5.66%.

In Australia, the S&P/ASX 200 rose 1.44% to 7,793.30, with Paladin Energy up 8.44% and AGL Energy 7.4% firmer in Sydney trading.

Conversely, New Zealand's S&P/NZX 50 experienced a slight decline of 0.17% to 11,800.78, with Pacific Edge and Arvida Group leading the losses, falling 4.76% and 3.92%, respectively.

In currency markets, the dollar was last up 0.38% on the yen to trade at JPY 154.50, while it strengthened 0.42% against the Aussie to AUD 1.5157.

The greenback meanwhile weakened 0.01% on the Kiwi, last changing hands at NZD 1.6640.

On the oil front, Brent crude futures were last up 0.08% on ICE at $83.40 per barrel, while the NYMEX quote for West Texas Intermediate advanced 0.1% to $78.56.

Australia holds interest rates, Japan services activity accelerates

In economic news, Australia's Reserve Bank opted to maintain its benchmark lending rate at 4.35% for the fourth consecutive meeting, aligning with expectations set by economists surveyed by Reuters.

In its statement, the central bank acknowledged a slowdown in inflation, emphasising it has decelerated more than previously anticipated while still remaining high.

The RBA said achieving its 2% inflation target would take time, adding that it was open to various monetary actions without committing to any specific measures.

Meanwhile, Australia's retail sales volumes experienced a 0.4% decline on a seasonally-adjusted basis in the March quarter compared to the prior three months, according to fresh official data.

The drop followed a 0.4% increase in the December quarter, while on a year-on-year basis, retail sales volumes were down 1.3% in the March quarter.

In Japan, the services sector witnessed robust expansion in April, marking its fastest pace of growth since August, according to final figures from S&P Global.

The headline au Jibun Bank Japan services business activity index stood at 54.3 in April, compared to 54.1 in March, reaching an eight-month high.

Any figure above 50 indicates expansion.

The survey attributed the surge in business activity to increased business and consumer spending, with sustained expansion recorded since September 2022.

Reporting by Josh White for Sharecast.com.