Asia report: Most markets rise, RBA cuts rate to record low

Most markets in Asia closed higher on Tuesday, as investors reacted to the first concrete action from a central bank amid the coronavirus outbreak, with interest rates in Australia being cut to a record low.

In Japan, the Nikkei 225 went against the regional trend, falling 1.22% to 21,082.73, as the safe-haven yen strengthened 0.35% against the dollar to last trade at JPY 107.95.

Of the major components on the benchmark index, automation specialist Fanuc was down 2.4% and Uniqlo owner Fast Retailing lost 1.38%, while technology conglomerate SoftBank Group was 0.99% higher.

The broader Topix index was also in the red, losing 1.36% by the end of play in Tokyo, finishing at 1,505.12.

On the mainland, the Shanghai Composite managed gains of 0.74% to settle at 2,992.90, and the smaller, technology-heavy Shenzhen Composite rose 1.03% to 1,888.92.

South Korea’s Kospi was ahead 0.58% at 2,014.15, while the Hang Seng Index in Hong Kong slipped 0.03% to 26,284.82.

Both of the blue-chip technology stocks were stronger in Seoul, with Samsung Electronics ahead 0.73% and SK Hynix rising 0.76%.

Sentiment was cautiously optimistic in the region, after reports emerged that G7 economies were planning to release a statement on Tuesday or Wednesday outlining plans to counter the effects of the Covid-19 outbreak.

According to Reuters, however, those plans were not understood to include any specific spending or a coordinated round of interest rate cuts from central banks.

Later in the global day, Federal Reserve chair Jerome Powell and US Treasury secretary Steven Mnuchin are scheduled to hold a conference call with finance ministers and central bankers from around the globe.

“Nevertheless, after a weekend full of stimulus-suggesting statements, news that the central bank chiefs and finance ministers of the G7 would be having a conference call to discuss an action plan - like a fiscal version of the Avengers - designed to combat the coronavirus crisis was enough to point the markets in the right direction,” said Spreadex analyst Conor Campbell.

“It helped that the Reserve Bank of Australia has already given the G7 an example of what they can do, cutting its cash rate by 25 bps to a record low of 0.5%.”

Oil prices were higher at the end of the Asian day, with Brent crude last up 3.06% at $53.54 per barrel, and West Texas Intermediate rising 3.57% to $48.48.

In Australia, the S&P/ASX 200 was 0.69% firmer at 6,435.70, after the Reserve Bank of Australia confirmed a 25 basis point cut to its official cash rate to 0.5% - a new record low.

“The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors,” said the central bank’s governor, Philip Lowe.

“The global outbreak of the coronavirus is expected to delay progress in Australia towards full employment and the inflation target.

“The board therefore judged that it was appropriate to ease monetary policy further to provide additional support to employment and economic activity.”

Across the Tasman Sea, New Zealand’s S&P/NZX 50 bounced 2.19% to 11,346.31, led higher by broadband infrastructure operator Chorus, which was up 5.1% to a record closing price.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.39% at AUD 1.5329, and the Kiwi advancing 0.03% to NZD 1.5966.