Asia report: Markets mixed as RBA finally cuts interest rates
By Josh White
Date: Tuesday 18 Feb 2025
(Sharecast News) - Asia-Pacific markets showed a mixed performance on Tuesday as investors assessed comments from Chinese president Xi Jinping, who reiterated support for the private sector and encouraged businesses to showcase their strengths.
Meanwhile, the Reserve Bank of Australia delivered its first rate cut in over four years, in line with expectations.
Markets on Wall Street were closed overnight for the Presidents' Day federal holiday in the US.
Stephen Innes, managing partner at SPI Asset Management, said Asia's markets were set for a whirlwind Tuesday, noting that Japan's GDP blowout had reignited yen strength, sending shockwaves through currency markets, while China's AI-driven tech explosion was pulling in hedge fund flows at a "relentless" pace.
"Throw in the broader macro landscape-where bond markets remain on edge, constantly second-guessing the fallout of a potential Trump 2.0 presidency while relentlessly recalibrating Fed rate cut expectations - and you've got a week that's anything but predictable," he noted.
"Every data print, every policy hint, and every geopolitical twist is fueling a market that refuses to sit still.
"Volatility isn't just lingering - it's setting up camp."
Innes said easing inflation down under had paved the way for a modest rate-cutting cycle from the Reserve Bank of Australia, but noted that money markets were pricing in just 50 basis points of additional easing this year following Tuesday's move.
"That's a far cry from the aggressive cuts seen elsewhere, reinforcing the notion that the RBA will tread carefully."
Regional markets mixed after relatively quiet Monday
Japan's Nikkei 225 gained 0.25% to close at 39,270.40, with the broader Topix up 0.31% at 2,775.51.
Mitsubishi Motors surged 6.89% after a report suggested Honda remained open to a potential deal with Nissan, which could involve Mitsubishi as a strategic partner.
Other top gainers in Tokyo included Kanadevia and IHI Corporation.
In China, markets declined despite Xi's reassurances.
The Shanghai Composite dropped 0.93% to 3,324.49, while the Shenzhen Component lost 1.61% to 10,617.26.
Notable losers in Shanghai included Suli Co, Shanghai Wondertek Software, and Shanghai Runda Medical Technology, all of which fell around 10%.
Hong Kong's Hang Seng Index outperformed, rising 1.59% to 22,976.81.
Gains in the special administrative region were led by Kuaishou Technology, which jumped 9.61%, followed by Xiaomi and JD Health International.
South Korea's Kospi 100 advanced 0.74% to 2,618.62, supported by strong performances from LS Industrial Systems, Hanwha Techwin, and Doosan Robotics, which all posted double-digit gains.
In Australia, the S&P/ASX 200 fell 0.66% to 8,481.00 despite the RBA's rate cut.
Financial services firm Challenger saw the sharpest drop, down 8.97%, followed by declines in Mineral Resources and Sigma Healthcare.
Across the Tasman Sea, New Zealand's S&P/NZX 50 edged down 0.14% to 13,051.12, weighed by a steep 14.81% decline in Heartland Group, while Freightways and Mercury NZ also posted losses.
In currency markets, the dollar was last up 0.25% on the yen, trading at JPY 151.89, while it advanced 0.48% against the Kiwi to NZD 1.7517.
The greenback was weaker on the Aussie after the RBA's rate cut, however, slipping 0.03% to change hands at AUD 1.5728.
Oil prices climbed, with Brent crude futures last up 0.61% on ICE at $75.68 per barrel, and the NYMEX quote for West Texas Intermediate advancing 1.46% to $71.77.
RBA cuts rates for first time since 2020, Chinese president Xi addresses private sector
In central bank news, the Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to 4.1% on Tuesday, marking its first easing since November 2020.
The RBA had previously slashed rates to record lows during the pandemic to support a slowing economy, but later raised them 13 times to curb inflation.
Since November 2023, it had held its policy rate steady at 4.35% before delivering the cut.
Meanwhile, Chinese president Xi Jinping reaffirmed his support for the private sector during a closed-door meeting with leading entrepreneurs on Monday.
According to state media, Xi encouraged businesses to seize opportunities in what he called a "new era" for private enterprise.
He acknowledged ongoing financial challenges but described them as temporary and subject to reform.
Xi also pledged to address delayed payments owed to private firms and strengthen legal protections for businesses, emphasising a need for a "clean relationship" between government and industry, according to CNBC.
The president's remarks came amid concerns over Beijing's regulatory influence on private companies, as the government continued efforts to stimulate economic growth.
Recent policy measures had been focused on reviving domestic consumption and mitigating the impact of a prolonged real estate downturn.
Reporting by Josh White for Sharecast.com.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN