Asia report: Most markets fall as hawkish RBA hikes rates

by | May 3, 2022

Most markets in Asia closed in negative territory on Tuesday, after Australia’s central bank hiked interest rates for the first time in over 11 years.
In Japan, traders had the day off for the Constitution Memorial Day holiday, as the yen strengthened 0.02% on the dollar to last trade at JPY 130.14.

On the mainland, markets were also closed in China for the third day of the four-day Labour Day holiday.

South Korea’s Kospi was 0.26% lower at 2,680.46, while the Hang Seng Index in Hong Kong was 0.06% firmer at 21,101.89.

Internet giant Alibaba Group was in focus in the special administrative region, closing down 1.76%, having earlier traded as much as 9% lower.

The moves came after Chinese state media reported that “criminal coercive measures” had been taken against someone with the surname Ma over allegations of jeopardising national security via the internet.

There were initially rumours that the person was Alibaba founder Jack Ma, although those concerns were somewhat alleviated by later reports that the person’s first name consisted of two Chinese characters, whereas Ma’s has just one.

Seoul’s blue-chip technology stocks were a mixed bag, meanwhile, with Samsung Electronics up 0.3%, while SK Hynix lost 0.45%.

Oil prices were lower as the region went to bed, with Brent crude futures last down 1.12% on ICE at $106.38 per barrel, and the NYMEX quote for West Texas Intermediate 0.96% lower at $104.16.

In Australia, the S&P/ASX 200 lost 0.42% to 7,316.20, after the country’s central bank lifted its cash rate by more than expected.

The Reserve Bank of Australia took its key interest rate up 25 basis points to 0.35%, more than the 15 basis point hike pencilled in by economists in a Reuters poll.

It was also the first time the bank raised the rate since November 2010.

“Today’s hike locks the RBA into a synchronous global hiking cycle, which also suggests that the Street will need to update its forecasts for the RBA cash rate path and factor in a potentially more volatile and aggressive rate hike cycle from the RBA,” said analysts at TD Securities.

The news saw three of the country’s big four banks close weaker, with Australia and New Zealand Banking Group down 0.15%, Commonwealth Bank of Australia off 0.69%, and National Australia Bank losing 0.65%.

Westpac Banking Corporation was the odd one out, managing gains of 0.08% by the end of trading in Sydney.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 slid 0.92% to 11,675.92, led lower by shipping firm Move Logistics, which lost 7.8%.

The company told shareholders it was expecting underlying earnings to come in between NZD 53m and NZD 56m for the year to June, down from previous forecasts for at least NZD 61m.

It was a mixed day for the down under dollars against the greenback, with the Aussie last 0.66% firmer at AUD 1.4089, while the Kiwi retreated 0.16% to NZD 1.5565.

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