The major Asia Pacific stock indexes rebounded on Tuesday with Chinese markets reversing some of their previous plunge amid official efforts to calm coronavirus fears, although investor sentiment remained shaky with crude oil near 13-month lows.
On Tuesday, Japan’s Nikkei 225 Index settled at 23084.59, up 112.65 or +0.49%. Hong Kong’s Hang Seng Index finished at 26699.58, up 342.60 or +1.30% and South Korea’s KOSPI Index closed at 2157.90, up 39.02, or +1.84%.
In China, the Shanghai Index settled at 2783.29, up 36.68 or +1.34% and Australia’s S&P/ASX 200 finished at 6948.70, up 25.40 or +0.37%.
RBA Holds Policy Steady
The Reserve Bank of Australia (RBA) announced Thursday it would hold its benchmark interest rate unchanged at 0.75%. In doing so, it made the following comments.
RBA policymakers sounded optimistic as they maintained forecasts for economic growth for this year and next at 2.75% and 3%, respectively central bank’s policy decision helped drive gains in the interest rate sensitive financial sector.
“Due to both global and domestic factors, 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,” RBA Governor Philip Lowe said in a media release announcing the central bank’s monetary policy decision.
On the topic of the ongoing coronavirus outbreak, Lowe said it was a source of uncertainty that is having a “significant effect” on the Chinese economy currently, though it is “too early to determine how long-lasting the impact will be.”
Australian Shares Settle Higher
Australia’s benchmark S&P/ASX 200 Index recouped some of its sharp losses suffered over the past week, helped by financial and healthcare stocks, although concerns over the fast-spreading coronavirus outbreak capped gains.
Australia and New Zealand Banking Group Ltd jumped 1.5% and was among the top boosts to the benchmark index. The bank’s stock was upgraded by Credit Suisse and Morgan Stanley on improving outlook.
The country’s No. 2 lender Westpac Banking Corp ended flat after falling as much as 1.5% during the session. The bank was hit with a class-action lawsuit in the United States on Monday over issues with its financial crime monitoring.
The coronavirus epidemic in China, Australia’s biggest trade partner, continued to keep risk sentiment in check. According to Reuters, analysts said the economic impact of the epidemic coupled with the bushfires in Australia are likely to lead to an interest rate cut by the RBA in April.
“The uncertainty around the coronavirus poses substantial risks to economic forecasts but certainly the impact of the virus over the course of the first quarter both globally and domestically has to be quite damaging,” Westpac said in a note to clients, adding that it expects a rate cut in April.
This article was originally posted on FX Empire
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