Asia report: Markets mixed as RBA cuts interest rate to all-time low

Markets in Asia finished higher on Tuesday, following a solid close on Wall Street overnight, as the Reserve Bank of Australia took the axe to its interest rate, cutting it to a new record low.

In Japan, the Nikkei 225 was up 0.59% at 21,885.24, as the yen weakened 0.19% against the dollar to last trade at JPY 108.28.

Of the major components on the benchmark index, automation specialist Fanuc was up 0.59% and technology conglomerate SoftBank Group added 1.77%, while fashion firm Fast Retailing fell 1.11%.

Apple suppliers were mixed in Tokyo trading, with Murata Manufacturing up 2.49% and Taiyo Yuden rising 3.96%, while Japan Display lost 5%.

It came after the California-based consumer technology giant rose 2.4% in New York overnight, after JP Morgan raised its price target on the back of promising early sales estimates of the iPhone 11 range.

The broader Topix index finished the session up 0.96%, to close at 1,603.00.

Fresh data out of Japan showed a mild worsening in conditions for large manufacturers, with the third-quarter Tankan survey of large manufacturing players reaching its lowest level in more than six years.

“[The] Tankan manufacturing index declined from 7 to 5 in the third quarter, significantly less than 1 expected by analysts, as the manufacturing outlook deteriorated slower than feared,” said London Capital Group senior market analyst Ipek Ozkardeskaya.

“But capital expenditure across all industries fell from 7.4% to 6.6%, versus [the] 7% penciled in by analysts. Soft, but not catastrophic data, spurred expectations that the Bank of Japan would announce additional stimulus by the end of this month.”

The country was also hit by the delayed implementation of an increased sales tax, to 10% from 8%, in a controversial move that had created consternation in the retail and hospitality sectors.

South Korea’s Kospi was 0.45% firmer at 2,072.42, while markets on mainland China and in Hong Kong were closed for a public holiday.

The blue-chip technology stocks were both weaker in Seoul, with Samsung Electronics down 0.41% and chipmaker SK Hynix off 0.24%.

Biopharmaceutical company Celltrion was a shining star on the Korean peninsula, rocketing ahead 5.79%.

Oil prices were higher as the region went to bed, with Brent crude last up 1% at $59.85 per barrel, and West Texas Intermediate ahead 1.22% at $54.74.

In Australia, the S&P/ASX 200 was up 0.81% at 6,742.80, as the country’s central bank cut its official cash rate by 25 basis points to a new record low of 0.75%.

“It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target,” said the central bank’s governor Philip Lowe.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was up 0.65% at 10,996.99, with the big news on the Wellington bourse being outdoor clothing and equipment brand Kathmandu’s acquisition of Australian surfwear giant Rip Curl.

Kathmandu’s shares were in a trading halt at it completed a NZD 145m entitlement offer to help fund the deal, worth NZD 368m and set to create an NZD 1bn apparel retail group.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.81% at AUD 1.4929, and the Kiwi retreating 0.65% to NZD 1.6066.