Asian stocks mostly gained on Tuesday, despite disappointing data from China, with Australia's shares climbing and its dollar falling after the Reserve Bank of Australia cut interest rates unexpectedly.
The RBA cut its benchmark rate by 25 basis points to a record low 1.75 percent, noting that inflation data are unexpectedly low and that it is less concerned by the risk low rates pose to the housing market. A majority of economists polled by Reuters had expected no change.
In the wake of the decision, the benchmark ASX 200 ended up 2.11 percent, or 110.83 points, at 5,353.80, compared with gains of around 0.55 percent before the decision. The Australian dollar dropped to as low as $0.7553 after the decision, from levels a tad above $0.77 before the announcement. The Australian dollar recovered a bit to fetch $0.7613 at 3:36 p.m. HK/SIN time.
Regional markets largely shrugged off a disappointing survey on China's manufacturing sector.
The China Caixin manufacturing purchasing managers index (PMI) for April fell to 49.4 from March's 49.7, shrinking for a 14th month and coming in below a Reuters forecast for 49.9. Levels below 50 indicate contraction.
Economists weren't necessarily downbeat on the reading.
"Although they missed expectations, the latest PMI readings do little to alter our view that China is in the midst of a cyclical rebound that should continue for at least another couple of quarters," Julian Evans-Pritchard, a China economist at Capital Economics, said in a note Tuesday. "There are few signs in the latest readings that the ongoing property rebound, a key driver of the recent recovery, is losing steam."
Hong Kong's Hang Seng Index dropped 1.45 percent by 3:37 p.m. HK/SIN time, extending losses after the disappointing data. But on the mainland, shares extended gains, with the Shanghai Composite tacking on 1.87 percent, or 54.87 points, to end at 2993.20, and the Shenzhen Composite added 2.94 percent, or 55.04 points, to close at 1929.03. South Korea's Kospi index added 0.42 percent, or 8.26 points, to end at 1986.41.
In Australia, shares of ANZ surged 5.56 percent, erasing early losses of as much as 4.0 percent, despite the heavyweight bank reporting that its fiscal first-half profit tumbled more than 20 percent, coming in below expectations, and spurring the bank to cut its dividend. That follows a sell-off in banks Monday after Westpac's earnings also missed expectations, which had knocked ANZ's shares down 2.2 percent.
But traders may be focusing instead on ANZ's statement that the earnings miss was largely due to charges related to "repositioning" the bank to improve profit ahead.
Market players will also be watching for the release of the Australian government's budget, due after market close. In a note Tuesday, ANZ said it doesn't expect much adjustment in the country's fiscal profile.