Australian shares jumped Tuesday as the central bank kept rates unchanged and signaled they wouldn’t rise soon, while other Asian shares retreated ahead of a U.S. trading holiday and uncertainty over North Korea’s latest missile launch.
KEEPING SCORE: Australia’s S&P/ASX surged 1.7 percent to 5,778.60 while Japan’s benchmark Nikkei 225 index shed 0.3 percent to 19,999.43. South Korea’s Kospi declined 0.6 percent to 2,379.03 and Hong Kong’s Hang Seng slumped 1.5 percent to 25,389.30. The Shanghai Composite Index lost 0.5 percent to 3,178.21. Benchmarks in Taiwan and Southeast Asia also lost ground.
DECISION DOWN UNDER: Officials at the Reserve Bank of Australia kept interest rates unchanged at 1.5 percent following a monthly policy board meeting, saying it was the right level for sustainable economic growth and to hit inflation targets. More importantly, they indicated they wouldn’t follow counterparts in the U.S., Britain, Europe and Canada who have started raising rates or are considering doing so. “The outlook continues to be supported by the low level of interest rates,” the RBA said. Meanwhile, consumer confidence strengthened and retail sales rose for a second straight month, according to new data.
ROCKET LAUNCH: South Korean shares wobbled briefly after first reports that Pyongyang fired yet another ballistic missile toward Japan, then resumed sliding as more details came in. Officials said the missile, fired from North Phyongan province, flew for about 40 minutes, longer than any other previous similar test, and covered 930 kilometres (580 miles).
MARKET VIEW: The missile launch is “sort of sending risk topsy turvy right now,” said Stephen Innes, senior trader at OANDA. “Markets are a little bit thin so there could possibly be an overreaction, given that liquidity is a bit edgy with the holiday-thinned U.S. market conditions.”