Asian Equities Higher as RBA Looms

Asian shares inched cautiously higher on Tuesday as investors wagered Australia would become the latest country in the region to inject more policy stimulus into its economy.  Liquidity was lacking with markets in Japan, South Korea and Thailand on holiday and little in the way of major economic data on the docket for Tuesday. The pivotal release of the week, U.S. payrolls, is not until Friday.

As a result MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up a slim 0.19 percent.  Australia’s main index .AXJO rose 1.1 percent as investors waited to see if the country’s central bank would cut interest rates to a record low of 2.0 percent as many expect.

Markets are pricing in a 60 to 70 percent probability of an easing following the Reserve Bank of Australia’s (RBA) monthly policy meeting. A decision will be announced at 0430 GMT.  A cut could dent the Australian dollar, whose stubborn strength is a major argument for easing in the first place. For the moment, the Aussie was holding steady at $0.7840