HONG KONG- Asian stocks rose on Tuesday after Australia’s central bank held interest rates steady, which helped ease investor worries about over-tightening of policies by central banks.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up by 0.3 percent by Tuesday early afternoon, reversing mild losses in the morning.
Australian shares added 0.5 percent. The Reserve Bank of Australia (RBA) kept its cash rate at 4.10 percent, saying it wanted more time to assess the impact of past hikes.
Signs of constrained global demand amid rate hikes is making central banks nervous, said Gary Ng, senior economist for Asia-Pacific thematic research at Natixis.
“Central banks, especially those in the Asia Pacific region, have no choice but to rebalance their hawkish stance,” he said.
That less hawkish stance, together with signs that China is pushing to support yuan, is propping up the market, he said.
Matt Simpson, senior market analyst at City Index, said the pause in rate hikes by the Australian central bank “came as a relief to equity bulls”.
“The ASX looks determined to tap 7300 this week. But it may need to look for global sentiment to pick up to hold on to recent gains,” he added.
Japan’s Nikkei share average .N225fell 0.9 percent as investors exited some bullish positions after the benchmark index closed at a 33-year high in the previous session.
China’s mainland benchmark was flat and Hong Kong’s Hang Seng Index added 0.6 percent, led by tech companies.
US S&P 500 E-mini stock futures were flat in Asian trade. Wall Street stock indexes ended Monday’s shortened session up slightly along with Treasury yields.
Most of Wall Street was closed for the US Independence Day public holiday on Tuesday.
In early European trades, the pan-region Euro Stoxx 50 futures and German DAX futures both edged up by around 0.2 percent, while FTSE futures were almost flat.
Investors are now watching out for a mixed bag of economic data ahead of second-quarter earnings for more trading cues, while uncertainty remains over the US Federal Reserve’s policy path, said Manishi Raychaudhuri, head of Asia Pacific equity research at BNP Paribas.
