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Australian equities lead Asian gains as RBA decision looms

Tuesday 03.30 BST

What you need to know

  • Australian dollar pushes past US$0.80 ahead of RBA decision
  • Asia Pacific equities broadly higher on gains from financials
  • Australian stocks climb as sovereign bonds retreat
  • Yen strengthens to touch ¥110 as greenback hovers near 13-month low

Overview

Stocks climbed, bonds fell and the Australian dollar crossed the US$0.80 mark ahead of a rates decision on Tuesday from the Reserve Bank of Australia, while equities across the region gained ground.

Hot topic

Australian equities were up ahead of a Tuesday afternoon rates decision from the RBA, which is widely expected to stand pat.

The S&P/ASX 200 index was up 0.7 per cent as the financial segment climbed 0.8 per cent. Shares in energy and fuel wholesaler AGL Energy rose as much as 2 per cent amid local media reports that it has begun an auction for its smart metering business.

Stock market gains in Sydney came despite continued gains for the Australian dollar, was trading at $0.8038 to its US counterpart.

Despite a subdued outlook for a rates rise from the RBA, the country’s government bonds were faring poorly. The yield, which moves inversely to price, on Australia’s 10-year government note was up 3 basis points at 2.715 per cent, a four-day high.

Equities

Stocks elsewhere in the region were climbing as well, with financials leading the charge.

Shares in Hong Kong were gaining momentum after a slow start, with the Hang Seng index up 0.5 per cent on strength in the financials segment. Shares in HSBC climbed 0.6 per cent — bringing them 3.2 per cent higher for the week — after the announcement of a $2bn share buyback on Monday.

In Tokyo the Topix was up 0.4 per cent as financials rose 1.1 per cent ahead of earnings from major groups including Mitsubishi UFJ Financial, which was up 1.2 per cent. Rival Sumitomo Mitsui Financial rose 2.2 per cent.

Forex and fixed income

Japan’s yen firmed to ¥110 as most Asia Pacific currencies made minor advances on the dollar in morning trade.

The dollar index — measuring the greenback against a basket of peers — was flat at 92.842, still near a 13-month low touched on Monday. The yield on 10-year US Treasuries was up 1bp at 2.3 per cent.

Commodities

Crude oil was climbing in morning Asia trading after recovering from an afternoon dip on Monday. Brent crude, the international benchmark, was up 0.3 per cent at $52.86 a barrel, while US marker West Texas Intermediate rose 0.3 per cent at $50.32.

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