Stocks mostly higher; The RBA raises interest rates

The Reserve Bank of Australia building in Sydney, Australia, Monday, September 6, 2021.

David Gray | Bloomberg | Getty Images

Shares in the Asia-Pacific were mostly trading higher on Tuesday as Australia’s central bank raised interest rates again.

Mainland China̵[ads1]7;s Shanghai Composite rose 1.36% to 3,243.56 and the Shenzhen component was 1.037% higher at 11,799.81 after officials signaled more economic support.

Japan’s Nikkei 225 was roughly flat at 27,626.51, and the Topix index was 0.11% lower at 1,926.58. The Japanese yen weakened sharply, hitting a 24-year high. It last changed hands at 141.55 per dollar.

Hong Kong’s Hang Seng Index traded roughly flat in the final hour of trading.

The Kospi in South Korea was up 0.26% to 2,410.02 and the Kosdaq rose 1.04% to 779.46.

In Australia, the S&P/ASX 200 pared the gains to close 0.38% lower at 6,826.50.

The Reserve Bank of Australia raised interest rates by half a point to 2.35%, as expected by analysts polled by Reuters. The Australian dollar weakened and last traded at $0.6779 following the move.

MSCI’s broadest index of Asia-Pacific shares outside Japan was roughly flat.

On Monday, the People’s Bank of China announced it would cut the foreign exchange reserve requirement, or the amount of foreign exchange reserves that financial institutions must hold, to improve financial institutions’ ability to use foreign exchange reserves.

From 15 September, the RRR will be 6%, down from 8%.

“This cut should help increase foreign exchange liquidity and thereby reduce the depreciation pressure on the CNY. Although the actual impact on foreign exchange liquidity is small…this cut serves as a strong policy signal that the PBOC is uncomfortable with the rapid depreciation of the currency,” analysts at Goldman Sachs Economics Research wrote in a note late Monday.

On Tuesday, the PBOC set the yuan’s midpoint against the dollar at 6.9096, the weakest since Aug. 25, 2020, according to Wind Information.

US markets were closed overnight due to a public holiday.

In the oil markets, US crude increased its gains from the previous session, while Brent oil fell slightly.

— CNBC’s Evelyn Cheng contributed reporting.

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