Hong Kong: Asian shares climbed for a third session on Tuesday, led by tech stocks, while the Australian dollar slipped on uncertainty about the pace of future interest rate hikes.
Australia’s central bank raised its cash rate by 25 basis points to 4% and flagged further hikes ahead, saying a surprisingly strong recovery allowed it to move policy towards more normal settings.
“The tightening bias is still intact, though the timing of future rate hikes is debatable. I think they are likely to stay on the sidelines until June, after they have the latest inflation numbers and the budget in May,” said Su-lin Ong, senior economist with RBC Capital Markets in Sydney.
This was the fourth increase in five policy meetings, putting Australia far ahead of most other rich nations where rates are at 1% or less.
The MSCI index of Asia Pacific shares outside Japan rose about 0.8%, with the information technology sector in clear command of the day.
Lower volatility in financial markets and upbeat comments from SanDisk Corp., the biggest maker of NAND flash memory cards, lifted tech-heavy Asian share markets such as South Korea and Taiwan.Japan’s Nikkei average rose 0.5%, buoyed by gains in chip-linked stocks. But overall trade was cautious throughout the day, with the Nikkei swinging into negative territory earlier due to worries about the outlook for the US economy following mixed data.
Australian stocks rose 0.3%, taking gains to three straight days, as the market built on Wall Street’s gains, but the central bank’s interest rate hike limited the upside.
Shares in South Korea advanced 1.3%. However, Hong Kong stocks lost 0.7% after HSBC Holdings Plc slumped following its disappointing results, while stocks in Shanghai shed half a percent as investors took profit on small caps after a recent rally.
The dollar posted modest gains, staying firm against the euro and the pound as fiscal and political concerns continued to weigh on Europe’s currencies. Sterling dipped and was seen likely to stay weak after tumbling to a 10-month low the previous day, hurt by worries that a UK election due in months could give neither the opposition Conservatives nor the ruling Labour Party a parliamentary majority.
Masayuki Kitano in Tokyo contributed to this story.