Chinese shares plummeted on Tuesday, while their counterparts in Sydney witnessed volatile trade following the Reserve Bank of Australia's (RBA) decision to cut interest rates for the second time this year.
The central bank lowered rates by 25 basis points in a widely expected move, taking the benchmark lending rate to a new record low of 2 percent. The Australian dollar fell as low as $0.7795 on the data release, but quickly climbed back up to trade near intra-day highs of $0.7898 against the greenback.
"The RBA rate cut was in line with market expectations however, the statement was perhaps a little more upbeat than some would have expected. In a nutshell, it gave no hint of further easing and sounded like it is done with this easing cycle. Some are wondering why the RBA wouldn't keep the easing bias in its language to keep the Aussie dollar lower," IG market strategist Stan Shamu wrote in a note. "The price action in response was extremely choppy as it didn't take investors long to realize the shift in language from the statement."
Meanwhile, markets in Japan, South Korea and Thailand are closed for public holidays.
Overnight, U.S. stocks finished modestly higher, following positive momentum from Europe and as earnings came in better than expected. The Dow Jones Industrial Average and the S&P 500 gained 0.3 percent, respectively, while the Nasdaq Composite settled up 0.2 percent.
ASX slips 0.1%
Australia's benchmark S&P ASX 200 index slipped into negative territory, after spiking as much as 1.13 percent, on the back of the RBA's rate decision.
The banking sector turned mixed on the news, with the National Australia Bank and Westpac closing down 0.3 and 1.2 percent, respectively. Shares of Commonwealth Bank of Australia finished flat after meandering between gains and losses, while Australia and New Zealand Banking Group held on to 2.7 percent gains, supported by a better-than-expected 5 percent rise in first-half cash profit announced early Tuesday.
Outperforming the bourse was Domino's Pizza, which leaped 9 percent to all-time highs after Morgan Stanley raised its price target to A$50 from A$40.
On the domestic data front, Australia posted a seasonally adjusted trade deficit of A$1.32 billion in March, compared with a deficit of A$1.61 billion in the preceding month, according to government data.
Mainland markets plunge
Stung by local news reports that several Chinese brokerages have tightened requirements for margin financing, China's Shanghai Composite index reversed a higher open to slump 4.06 percent, ending Tuesday at a two-week low. This was the bourse's biggest single-day loss in nearly four months, according to Reuters.
The 80 percent run-up in mainland stocks since November has been anchored on a liquidity rush and markets may be in need of a correction, experts say. "The rally that we've seen is all due to liquidity, via southbound trading and the People's bank of China. So there must be some concern," Sam Le Cornu, co-head Asian Listed Equities & Head of Investments at Macquarie Asset Management, told CNBC's "Capital Connection."
Meanwhile, news of more stock listings also dented sentiment. "These markets are still very much focused on liquidity with yesterday's rally just as much about the probability of more easing. So notes circulating that we have 25 IPOs hitting the board until May 11, locking up 2.34 trillion renminbi are never a positive," noted Gavin Parry, managing director of Parry International Trading Limited.
Banking shares were among the most heavily-hit; major Chinese lenders such as China Construction Bank, Bank of China and Bank of Communications sagged nearly 5 percent each. Insurer Ping An Insurance and developer Poly Real Estate also closed down 4.8 and 6.9 percent, respectively.
In Hong Kong, the Hang Seng index also gave up early gains to close down 1.3 percent.
Casino plays were largely dismal following data that showed gambling revenue in Macau plummeted 38.8 percent in April from a year earlier, marking its eleventh consecutive monthly fall. Sands China, Melco Crown and SJM Holdings made losses between 0.8 and 1.1 percent, but Galaxy Entertainment advanced 1.8 percent.
Meanwhile, HSBC eased 1 percent ahead of first-quarter earnings due after market trading hours.
Rest of Asia
Indonesia's Jakarta Composite slipped briefly into negative territory before closing almost 0.4 percent higher after first-quarter gross domestic product (GDP) came in slightly below expectations. The Indonesian economy grew 4.71 percent for the first three months of 2015 from a year earlier, missing Reuters expectations for growth of 4.95 percent.
The rupiah slide to a one-month low of 13,030 against the U.S. dollar.
In India, the benchmark BSE index index reversed earlier gains to drift down 0.2 percent. In the previous session, the BSE and broader Nifty index posted their biggest daily gains in months after India's lower house of parliament approved the 2015/16 Finance Bill last Thursday.