Asia markets lose ground, Aussie dollar slips as RBA rhetoric turns slightly dovish

David Moir | Bloomberg | Getty Images

The Australian dollar slipped Tuesday afternoon as the Reserve Bank of Australia (RBA) rhetoric appeared slightly dovish, while equities around the region struggled.

The RBA kept its cash rate unchanged at a record low of 1.50 percent, noting recent economic data were consistent with moderate growth, but citing concerns over a softer labor market. The central bank also noted that regulators had moved to reinforce lending standards, indicating the RBA may be less concerned about rising home prices.

Analysts said the statement was read as slightly dovish.

"There are some subtle signs that the Bank is becoming more concerned about the outlook for the labor market and underlying inflation, but less concerned about the housing market," Paul Dales, chief Australia economist at Capital Economics, said in a note Tuesday. "We think that shift has further to go and that it will prompt the RBA to cut interest rates to 1.0 percent by the end of the year."

The Australian dollar fell as low as $0.7559 following the RBA's decision, from levels above $0.76 earlier in the session.

In the stock market, the benchmark ASX 200 shed 0.27 percent, or 16.084 points, to end at 5856.60, with most sectors trading lower.

The heavily-weighted financial subindex was down 0.65 percent as shares of major Australian banks slipped. ANZ declined 0.44 percent, while the Commonwealth Bank fell 0.53 percent, Westpac was down 0.97 percent and the National Australia Bank shed 0.93 percent.

In Japan, the Nikkei 225 fell 0.91 percent, or 172.98 points, to end at 18,810.25 as stocks came under pressure from a stronger yen.

Across the Korean Strait, the Kospi was down 0.3 percent, or 6.41 points, at 2161.10.

Chris Weston, chief market strategist at spreadbettor IG, reckoned Tuesday's trade had a "distinct risk-off vibe, although the moves in equities are probably best described as a 'drift', rather than a 'spike' lower."

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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In the currency market, the dollar traded at 100.60 against a basket of currencies at 2:55 p.m. HK/SIN, climbing from levels below 99.60 reached in the previous week.

"The dollar index has, for three straight sessions, tried and failed to trade above its 50-day moving average, last located around 100.67," said analysts at Singapore's DBS Bank in a Tuesday note.

Among major currency pairs, the yen traded at 110.43 to the dollar, strengthening from levels above 111.0 and likely pressuring Japanese export stocks.

Automakers, in particular, appeared to have been under pressure, as shares of Toyota declined 1.03 percent, Nissan was down 2.89 percent and Honda fell 2.66 percent.

Meanwhile, Toshiba shares dropped 9.38 percent. On Monday, Reuters, citing sources, said the troubled Japanese conglomerate would likely miss a third deadline to report its quarterly business results.

Among other currency pairs, the euro traded at $1.0658, while the British pound fetched $1.2442 at around 2:56 p.m. HK/SIN.

Oil prices were little changed on Tuesday during Asian hours, following an overnight decline. Global benchmark Brent traded at $52.95 a barrel, down 0.32 percent, while U.S. crude was at $50.06, off 0.36 percent, at 2:57 p.m. HK/SIN.

Reuters reported that Libya's Sharara oil field, the country's largest, resumed production on Sunday following a one-week disruption. The field was producing around 120,000 barrels per day on Monday and about 220,000 bpd prior to the March 27 shutdown.

More broadly, investors this week will be eyeing the meeting between Chinese President Xi Jinping and President Donald Trump on April 6 where the two leaders will have no shortage of weighty issues to discuss — including trade and North Korea among others.

"There is justifiable tension/apprehension building over the meeting between Presidents Trump and Xi this week as the former's China bashing over alleged mercantilist policies presumably sets the stage for what could be testy talks," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank.

Varathan noted fears of "collision course" are overdone and reckoned the two leaders will find "face-saving, 'win-win' deals to showcase."

Markets in China and Taiwan remained shut on Tuesday for a public holiday.