Asia Markets

Stocks in Hong Kong rise as the city's economy takes a hit in first quarter

Key Points
  • Stocks in Asia Pacific rose on Tuesday.
  • Hong Kong's government announced on Monday that the city's economy contracted 8.9% in the first quarter as compared to a year ago — its largest decline on record since 1974.
  • The Reserve Bank of Australia announced on Tuesday its decision to "maintain" its current policy settings.
  • Markets in China, Japan and South Korea were closed on Tuesday for holidays.

Stocks in Asia Pacific rose on Tuesday, with major markets regionally closed for holidays.

Hong Kong's Hang Seng index rose 1.08% to end its trading day at 23,868.66 after closing more than 4% lower on Monday. The city's government announced on Monday that Hong Kong's economy contracted 8.9% in the first quarter as compared to a year ago — its largest decline on record since 1974. 

In a statement, Hong Kong Financial Secretary Paul Chan said the "external environment is still very challenging" even though the virus situation in the city "seems to be under control."

"Going forward in the second quarter, we believe that even if there is improvement, the improvement will be gradual and small," Chan said.

Over in Australia, the S&P/ASX 200 rose 1.64% to close at 5,407.10, with shares of major banks such as Commonwealth Bank of Australia and Westpac all advancing. That came as the Reserve Bank of Australia announced Tuesday its decision to maintain policy.

"Globally, financial markets are working more effectively than they were a month ago, although conditions have not completely normalised," RBA Governor Philip Lowe said in a statement announcing the central bank's decision. "The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band."

Elsewhere, Singapore's Straits Times index gained 0.78% in afternoon trade. Overall, the MSCI Asia ex-Japan index rose 0.91%.

On the economic data front, Indonesia's first-quarter GDP print came in below expectations, according to Reuters. GDP in the first quarter rose 2.97% on a year-on-year basis in the first quarter,as compared to expectations of a 4.04% increase in a Reuters poll.

Markets in China, Japan and South Korea were closed on Tuesday for holidays.

Investors also continued to watch for developments on the global coronavirus pandemic as authorities around the world begin taking steps to unroll social distancing measures put in place to curb the virus' spread. That, however, comes amid rising U.S.-China tensions. 

AMP Capital Investor's Shane Oliver told CNBC's "Street Signs" on Tuesday that it's "way too early" to say that markets are "gonna go straight up from here."

"I think we are gonna see some pretty some pretty tough data globally, in Australia as well (as) Asia, over the next few months," said Oliver, who is head of investment strategy and chief economist at the firm. "I think it's a time to wait for better opportunities to buy into the market."

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.354 after seeing an earlier high of 99.577.

The Japanese yen traded at 106.71 per dollar after seeing levels around 107 yesterday. The Australian dollar changed hands at $0.6451 after crossing the $0.654 level last week.

Oil prices were higher in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 6.84% to $29.06 per barrel. U.S. crude futures also jumped 9.37% to $22.30 per barrel.