The Reserve Bank of Australia raised its cash rate to a 15-year high on Tuesday as surging bond yields and rising oil prices weighed on risk appetite across Asia. Regional indices traded mixed, while technology shares fell on concerns about the pace of AI development.
Asian equities traded in narrow ranges on Tuesday as the Reserve Bank of Australia lifted interest rates and a jump in bond yields and oil prices pressured risk appetite across the region. Wall Street futures traded largely unchanged in Asia after all three major U.S. indices fell modestly overnight, and regional markets took their cues from that move.
RBA lifts rate to 15-year high
Australia's S&P/ASX 200 ended 0.3% higher even as the RBA raised rates. The unanimous 25-basis-point increase, its fourth rate hike of the year, took the cash rate to 4.60%, its highest level since late 2011. Persistent inflation and rising energy costs kept price pressures elevated, with underlying inflation running at 3.6%, above the bank's 2%-3% target range. The central bank said it remained prepared to raise rates further if needed to prevent high inflation from becoming entrenched.
Asian markets mixed as yields, oil weigh
The benchmark 10-year U.S. Treasury yield climbed above 5.27% overnight, its highest level in 19 years. The two-year yield approached 5% as traders raised bets on further Federal Reserve increases through the middle of next year. Brent crude rose to around $107 a barrel amid no clear breakthrough in efforts to ease the conflict involving the United States and Iran and restore normal traffic through the Strait of Hormuz.
Japan's Nikkei 225 slipped 0.5%. The broader Topix index slid 1.8%.
South Korea's Kospi closed 0.3% lower. Hong Kong's Hang Seng index also fell 0.5%. China's blue-chip CSI 300 and Shanghai Composite each edged up 0.2%, reversing earlier losses. Singapore's Straits Times Index dipped 0.3%. India's Nifty 50 ticked down 0.2%.
Tech shares slide on AI concerns
Hong Kong's Hang Seng Tech sub-index fell 1% on Tuesday. Japan's SoftBank Group also slid 3.5%, as signs of a slower pace of artificial intelligence development added to concerns about the scale of investment underpinning the sector. OpenAI has scrapped the release of GPT-6.1 Astra, its next-generation AI model, after it failed internal safety controls, the Wall Street Journal reported. The report followed news that the company had paused training, evaluation and inference with tool use for some of its most capable models. Chinese technology stocks remained fragile after shares were hit Monday by reports of U.S. plans to restrict Chinese components used in data centres.
Source: Investing.com
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