Asia Markets

Stocks in Asia-Pacific jump ahead of U.S. election; Australian central bank lowers cash rate

Key Points
  • The Reserve Bank of Australia on Tuesday announced its decision to lower the cash rate target to 0.1%.
  • The upcoming U.S. presidential election between incumbent Donald Trump and former Vice President Joe Biden also weighed on investor sentiment.

SINGAPORE — Stocks in Asia-Pacific were higher on Tuesday as the Reserve Bank of Australia's lowered its cash rate target.

Hong Kong's Hang Seng index jumped 1.96% to close at 24,939.73, as shares of life insurer AIA soared 6.27%.

Mainland Chinese stocks were also higher on the day, with the Shanghai composite gaining 1.42% to about 3,271.07 while the Shenzhen component added 1.185% to approximately 13,580.04.

South Korea's Kospi also added 1.88% to close at 2,343.31. In Australia, the S&P/ASX 200 in Australia gained 1.93% to close at 6,066.40.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.33%.

Japan markets were closed for a holiday on Tuesday.

Australian central bank cuts cash rate

The moves in Asia-Pacific came as the Reserve Bank of Australia reduced its cash rate target to 0.1%.

Following the RBA announcement, the Australian dollar changed hands at $0.709, after falling to an earlier low of $0.7025.

"The cash rate is now really as close to negative as it can be," Paul Bloxham, chief economist for Australia, New Zealand and global commodities at HSBC, told CNBC's "Street Signs Asia" moments after the central bank's decision was announced.

"This is as far as the cash rate goes down without being negative," Bloxham said, citing past public comments from the Reserve Bank governor that negative rates are "extraordinarily unlikely."

The upcoming U.S. presidential election between incumbent Donald Trump and former Vice President Joe Biden also weighed on investor sentiment.

Oil prices jump

Oil prices rose in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 1.87% to $39.70 per barrel. U.S. crude futures gained 2.17% to $37.61 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.723 after seeing an earlier high of 94.051.

The Japanese yen traded at 104.58 per dollar after seeing levels above 104.8 against the greenback yesterday.