Stocks mixed; RBA hikes interest rates

Shares in the Asia-Pacific traded mixed on Tuesday as Australia’s central bank raised interest rates again.

Japan’s Nikkei 225 recovered from earlier losses to rise fractionally and the Topix index was near the flat line.

The Hang Seng index in Hong Kong gave up early gains to fall 0.42%. Mainland China’s Shanghai Composite added 1.01% and the Shenzhen Component was 0.655% higher.

The Kospi in South Korea was little changed and the Kosdaq gained 0.68%.

In Australia, the S&P/ASX 200 ticked slightly higher.

The Reserve Bank of Australia raised rates by a half point to 2.35%, as expected by analysts polled by Reuters. The Australian dollar was at $0.6808 following the move.

MSCI’s broadest index of Asia-Pacific shares outside of Japan was about flat.

On Monday, the People’s Bank of China announced it would cut the foreign exchange reserve requirement ratio, or the amount of FX reserves that financial institutions must hold, to improve the ability of financial institutions to use foreign exchange funds.

Starting Sept. 15, the RRR will be 6%, down from 8%.

“This cut should help increase FX liquidity and thus lower depreciation pressure for CNY. While the actual impact on FX liquidity is small … this cut serves as a strong policy signal that the PBOC is uncomfortable with the rapid depreciation of the currency,” analysts at Goldman Sachs Economics Research wrote in a note late Monday.

On Tuesday, the PBOC set the yuan’s midpoint against the dollar at 6.9096, the weakest since Aug. 25, 2020, according to Wind Information.

U.S. markets were closed overnight for a holiday.

In oil markets, U.S. crude extended gains from the previous session, while Brent crude declined slightly.

— CNBC’s Evelyn Cheng contributed reporting.