Stocks in Asia-Pacific were higher on Tuesday as the Reserve Bank of Australia’s lowered its cash rate target.
Hong Kong’s Hang Seng index led gains among the region’s major markets as it jumped more than 2%, as of its final hour of trading. Shares of life insurer AIA soared more than 6%.
Mainland Chinese stocks were also higher on the day, with the Shanghai composite gaining 1.42% to about 3,271.07 while the Shenzhen component added 1.185% to approximately 13,580.04.
South Korea’s Kospi also added 1.88% to close at 2,343.31. In Australia, the S&P/ASX 200 in Australia gained 1.93% to close at 6,066.40.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.3% as Japan markets were closed for a holiday on Tuesday.
The moves in Asia-Pacific came as the Reserve Bank of Australia reduced its cash rate target to 0.1%.
Following the RBA announcement, the Australian dollar changed hands at $0.7057, after falling to an earlier low of $0.7025.
“The cash rate is now really as close to negative as it can be,” Paul Bloxham, chief economist for Australia, New Zealand and global commodities at HSBC, told CNBC’s “Street Signs Asia” moments after the central bank’s decision was announced.
“This is as far as the cash rate goes down without being negative,” Bloxham said, citing past public comments from the Reserve Bank governor that negative rates are “extraordinarily unlikely.”
The upcoming U.S. presidential election between incumbent Donald Trump and former Vice President Joe Biden also weighed on investor sentiment.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.911 after seeing an earlier high of 94.051.
The Japanese yen traded at 104.58 per dollar after seeing levels above 104.8 against the greenback yesterday.
Oil prices dipped in the afternoon of Asian trading hours, with international benchmark Brent crude futures down about 0.49% to $38.78 per barrel. U.S. crude futures shed 0.3% to $36.70 per barrel.