Asia markets mostly fell in early trade on Tuesday, despite gains on Wall Street overnight amid a lack of key economic or market data.
In Australia, the benchmark ASX 200 declined 0.64 percent with most sectors falling. The energy sector was down 1.07 percent, materials was lower by 0.97 percent and the heavily weighted financials subindex fell 0.71 percent. Major banking and mining stocks were down.
The Australian dollar traded at $0.7338 at 8:23 a.m. HK/SIN after falling from an earlier high of $0.7346, ahead of the Reserve Bank of Australia’s (RBA) August policy meeting minutes release.
Earlier this month, the central bank left the cash rate unchanged at 1.5 percent. It said business conditions in the economy remained positive and non-mining business investment is increasing. But the bank cautioned against uncertainty in the outlook for household consumption amid high debt levels.
Analysts said they expect the RBA’s key message to remain unchanged in Tuesday’s meeting minutes.
Elsewhere, Australian Prime Minister Malcolm Turnbull survived a leadership challenge for the Liberal Party by Home Affairs Minister Peter Dutton, according to Reuters. Turnbull won by 48 votes to Dutton’s 35.
In Japan, the Nikkei 225 fell 0.55 percent in early trade while the Topix index declined 0.53 percent. In South Korea, the Kospi beat the downward trend to rise 0.23 percent.
In the currency market, the U.S. dollar index, which tracks the greenback against a basket of currencies, traded at 95.696 at 8:28 a.m. HK/SIN after declining from levels near 97.00 in the previous week.
The index “recorded its fourth consecutive daily decline against a backdrop of improved risk appetite, lower (U.S. Treasury) yields and news that President [Donald] Trump had expressed disappointment with recent Fed hikes,” Rodrigo Catril, a senior foreign-exchange strategist at the National Australia Bank, wrote in a morning note.
In an interview with Reuters, Trump said he disagreed with the Federal Reserve’s decision to raise interest rates, and he said the Fed should do “what’s good for the country.”
Catril added that this week’s trade talks between the U.S. and China will be pivotal to whether the Australian dollar can recover to levels above $0.75, or fall below $0.69.
Reports said that delegations from Beijing are set to meet with U.S. officials on Aug. 22 and Aug. 23 to try and find ways to resolve an escalating tariff war between the world’s two largest economies.
Catril explained that there were no “major” outcomes expected from this week’s talks but added that in September, the focus would turn on whether the U.S. decides to go with additional tariffs on $200 billion worth of Chinese imports or if “a truce is agreed and the decision to impose new tariffs is deferred.”
A trade truce between the two countries would be “a positive outcome for risk sentiment” and would open the door for the Australian dollar to trade back above $0.75, Catril said.
Among other currency pairs, the Japanese yen traded at 109.80 to the dollar, strengthening from an earlier low of 110.1. Meanwhile, the euro traded at $1.1527, gaining from earlier lows of $1.1477.
Oil prices rose overnight as global benchmark Brent was up 0.5 percent to settle at $72.21 a barrel while U.S. crude futures rose 0.8 percent to $66.43 a barrel.
Here’s a look at the trading day ahead:
- Australia – Reserve Bank of Australia policy meeting minutes at 9.30 a.m. HK/SIN
- Hong Kong – July inflation numbers at 4.30 p.m. HK/SIN
