Asian Stocks Mixed on Tariff Fears; Australia Hits Record High Ahead of RBI Decision
Australian shares hit record high, ASX 200 up 0.6% amid expected RBA and Fed rate cuts.
RBI likely to hold rate at 5.50%, Nifty 50 futures up 0.2% amid mixed pressures.
Wall Street falls; U.S. rate cut odds near 94%; Trump threatens high tariffs; Asian markets mixed.
Asian Markets Show Mixed Performance Amid RBA Rate Cut Expectations
Asian stock markets displayed a mixed performance on Wednesday, with most major indices experiencing minimal fluctuations.
In contrast, Australian shares surged to record highs, buoyed by growing anticipation of imminent interest rate reductions by the Reserve Bank of Australia (RBA). The S&P/ASX 200 climbed 0.6% to reach a new peak at 8,827.40 points.
This optimism comes ahead of the RBA's upcoming meeting next week, following its recent unexpected decision to keep rates unchanged. The positive momentum was also supported by expectations of rate cuts from the U.S. Federal Reserve.
Reserve Bank of India’s Rate Decision in Focus
Attention turned towards the Reserve Bank of India (RBI), set to announce its monetary policy later in the day. The central bank is largely anticipated to maintain its benchmark interest rate at 5.50%.
Nevertheless, some market analysts suggest a 25 basis point reduction is possible, given subdued inflation figures and mounting trade tensions between India and the U.S. Adding complexity to the RBI’s decision is the depreciation of the Indian rupee against the dollar.
Futures for India’s Nifty 50 modestly rose by 0.2% as investors awaited clarity on the policy outcome.
U.S. Economic Data and Trade Tensions Weigh on Sentiment
Wall Street faced downward pressure on Tuesday, closing lower following weak services sector data that compounded concerns arising from a soft U.S. jobs report released the previous week.
Correspondingly, U.S. stock index futures drifted down during Asian trading on Wednesday. Despite the easing economic signals, the odds of a September U.S. interest rate cut surged to nearly 94%, enhancing risk appetite among investors. However, this upbeat sentiment was dampened by escalating trade disputes.
President Donald Trump, speaking in a CNBC interview, threatened significant tariffs on pharmaceuticals and semiconductors, with drug tariffs potentially reaching 250%. Additionally, he confirmed plans to increase duties on imports from India beyond the existing 25% level, motivated by India’s ongoing purchases of Russian oil.
Meanwhile, other regional markets remained range-bound:
South Korea's KOSPI slipped 0.2%
Singapore's Straits Times Index edged down by 0.1%
Japan's Nikkei 225 increased 0.5%, TOKYO’s broader TOPIX index advanced by 1%
China's Shanghai Composite stayed flat, the Shanghai Shenzhen CSI 300 declined slightly
Hong Kong's Hang Seng index fell 0.4% on Tuesday
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