Asia Markets

Mainland Chinese shares jump, leading major Asia markets

Key Points
  • Asia stocks gained by the close on Tuesday.
  • Minutes from the Reserve Bank of Australia's (RBA) December monetary policy meting, where the central bank opted to leave the cash rate unchanged at 0.75%, showed it was "prepared to ease monetary policy further if needed."
  • Market sentiment has gotten a boost in recent days after the U.S. and China announced Friday they have reached a phase one trade deal.

Mainland Chinese shares led major Asia markets in making gains by the close on Tuesday, as sentiment continues to be buoyed by a recent phase one trade deal reached between Beijing and Washington.

The Shanghai composite bounced 1.27% to close at 3,022.42, and the Shenzhen composite jumped 1.30% to 1,708.41 while the Shenzhen component was up 1.45% to 10,306.03.

Hong Kong's Hang Seng index was also up 1.06% in its final hour of trade. Tech stocks gained, with Tencent up 2.83%. Shares of Meitu, a popular photo-editing app in China, rocketed 7%.

In Japan, the Nikkei 225 added 0.47% to close at 24,066.12 while the Topix index gained 0.59% to 1,747.20.

The Kospi in South Korea jumped more than 1% to close at 2,195.68. Shares of industry heavyweight Samsung Electronics were up by 3.66%, while chipmaker SK Hynix soared 4.74%.

Meanwhile, Australia's S&P/ASX 200 closed flat at 6,847.30.

Overall, the MSCI Asia ex-Japan index jumped 0.91%.

Minutes from the Reserve Bank of Australia's (RBA) December meeting, where the central bank opted to leave the cash rate unchanged at 0.75%, showed it was "prepared to ease monetary policy further if needed."

"Members agreed that it would be important to reassess the economic outlook in February 2020, when the Bank would prepare updated forecasts," the meeting minutes read. "As part of their deliberations, members noted that the Board had the ability to provide further stimulus to the economy, if required."

"The minutes of the Reserve Bank of Australia's meeting clearly kept the door open for further easing," analysts at Mizuho Bank wrote in a note. "The dovish tone of the RBA should lead to a softer AUD/USD."

The Australian dollar last changed hands at $0.6870 following the release of the minutes, having seen an earlier high of $0.6885.

In corporate news, Australia's banking regulator has launched an investigation into Westpac — one of the country's four major banks — for alleged money laundering breaches. Westpac shares were down more than 1% in the morning.

Market sentiment has gotten a boost in recent days after the U.S. and China announced Friday they have reached a phase one trade deal. As part of the agreement, the U.S. will roll back some levies on Chinese products and China will increase its purchases of U.S. agricultural products. Treasury Secretary Steven Mnuchin said Saturday the "deal will be signed in early January and then we will start on phase two."

Overnight on Wall Street, shares breached fresh record highs. The Dow Jones Industrial Average closed 100.51 points higher at 28,235.89. The S&P 500 ended its trading day 0.7% higher at 3,191.45 while the Nasdaq Composite jumped 0.9% to close at 8,814.23.

"I think markets are justifiably excited of any progress on the U.S.-China trade negotiation," Hannah Anderson, global market strategist at J.P. Morgan Asset Management, told CNBC's "Squawk Box" on Tuesday.

"However, there does remain quite a bit of work ... left to do and so I think markets are going to have a belated awakening to the fact that they can't exactly dismiss this risk throughout 2020," Anderson warned.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.126 after touching lows below 97.0 yesterday.

The Japanese yen traded at 109.55 against the dollar, having weakened sharply from levels below 108.8 late last week.

Oil prices gained in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 0.11% at $65.41 per barrel. U.S. crude futures also edged up fractionally to $60.27 per barrel.