Australia stocks jump after smaller-than-expected rate hike; Asia markets rise

This is CNBC's live blog covering Asia-Pacific markets.

Pedestrians wearing face masks walk past a monitor displaying the Nikkei 225 index on February 25 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images

Asia-Pacific shares traded higher on Tuesday after stocks on Wall Street rallied overnight.

The Nikkei 225 in Japan rose 2.96% to close at 26,992.21, marking the biggest daily gains since March 23. The Topix index gained 3.21% to close at 1,906.89. South Korea's Kospi advanced 2.5% to close at 2,209.38.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.95%. In Australia, the S&P/ASX 200 jumped 3.75% to close at 6,699.3. The Reserve Bank of Australia raised its benchmark interest rate by 25 basis points.

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Markets in mainland China and Hong Kong were closed for a holiday.

The Dow Jones Industrial Average popped 765.38 points, or nearly 2.7%, to close at 29,490.89. The S&P 500 advanced about 2.6% to 3,678.43. The Nasdaq Composite added nearly 2.3% to end at 10,815.43.

It was the best day since June 24 for the Dow, and the S&P 500′s the best day since July 27.

— CNBC's Tanaya Macheel and Samantha Subin contributed to this report.

'Cash is probably not trash,' says BNY Mellon Investment Management

Conventional wisdom suggests that holding cash in an inflationary environment is not recommended, but "cash is probably not trash anymore," according to Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management.

Asked if cash and Treasury bills look attractive given the inverted yield curve, Mitra said he agreed, emphasizing the benefits of holding cash in U.S. dollars.

"I think that's an area which still looks pretty good, it's an extension of the overall long dollar story," he said.

The U.S. dollar index has steadily climbed this year, from below 98 to above 111 as of Tuesday.

Markets are getting closer to an inflection point, strategist says
Markets are getting closer to an inflection point, strategist says

— Abigail Ng

Indonesia is Asia-Pacific's best-performing major index for the year

The Jakarta Composite index in Indonesia has risen around 6% since the start of the year — and that's been driven by an inflow of foreign investment into stocks and buoyed by higher commodity prices, said Maynard Arif, head of Indonesia equities at DBS Group Research.

Analysts also told CNBC that there are tailwinds for the broader Southeast Asian market compared to North Asian markets.

As of Monday's close, the worst performers were South Korea's Kospi and mainland China's Shenzhen Component.

Read more here.

— Abigail Ng

Oil prices climb ahead expectations of output cut from OPEC+ meeting

Oil prices climbed on Tuesday ahead of an upcoming OPEC+ meeting which could see a huge output cut of more than a million barrels per day.

Brent crude futures strengthened 0.64% to stand at $89.43 per barrel, while U.S. West Texas Intermediate inched up 0.49% to $84.04 per barrel.

"The Saudi-led cartel's desire for elevated prices is no surprise after last month's meeting," Mizuho Bank's Vishnu Varathan wrote in a note, referring to the group's announcement in September, when it announced to cut oil production by 100,000 barrels per day.

The move would be a "natural progression for OPEC+ to backstop prices," Varathan wrote.

— Lee Ying Shan

Australia's rate hike will help balance demand and supply: RBA statement

The Reserve Bank of Australia said its rate hike of 25 basis points will "help achieve a more sustainable balance of demand and supply" in the nation's economy.

The central bank said it expects to continue increasing rates over the period ahead.

It also noted that Australia's unemployment rate is at its lowest in almost 50 years and said an increase in the rate is expected with slowing economic growth.

–Jihye Lee

Australia's central bank raises interest rates by 25 basis points

The Reserve Bank of Australia raised its benchmark interest rates by 25 basis points to 2.60%, missing expectations forecasted by economists in a Reuters poll.

RBA's board members had said "the case for a slower pace of increase in interest rates as becoming stronger," according to minutes from its meeting in September.

This is the sixth consecutive move by the central bank in its attempt to control inflationary pressures in the economy.

The Australian dollar was down 0.8% at $0.64625 against the greenback shortly after the decision.

–Jihye Lee

South Korea, Japan defense stocks rise following North's missile test

Shares of South Korean defense companies rose at the open after North Korea launched another missile test.

Hanwha Aerospace rose 3.9% and Korea Aerospace rose 4.64% – both companies manufacture weaponry and military aircrafts.

Japan defense stocks also jumped. Hosoya Pyro-Engineering rose more than 5%, and Mitsubishi Heavy Industries advanced 3.69%.

Jihye Lee

South Korea's Naver slips more than 4% on Poshmark deal announcement

Shares of Naver fell in early trade after the South Korean internet giant said Monday it would buy U.S. e-retailer Poshmark for around $1.2 billion.

Naver's stock dropped 4.65%, compared to a rise of 1.34% on the broader Kospi index.

Poshmark shares jumped around 14% overnight in the U.S. after the announcement.

— Abigail Ng

CNBC Pro: Want a 'defensive move' with up to 5% return? Buy this fund, says strategist

It's been a volatile year for both stocks and bonds, with major Wall Street indexes just ending their worst month since March 2020, and Treasury yields remaining elevated.

However David Dietze, chief investment strategist at Point View Wealth Management, says "pockets of opportunity" still exist.

"Short-term defensive measures probably are warranted," Dietze told CNBC's "Street Signs Asia" on Monday, and named his favorite fund to play the market right now.

Pro subscribers can read more here.

— Weizhen Tan

Australia's central bank expected to hike rates by 50 basis points: Reuters poll

A Reuters poll of economists expects the Reserve Bank of Australia to hike its benchmark interest rate by 50 basis points to 2.85%.

RBA's board members said the case for a slower pace of rate hikes was growing, according to minutes from its Sept. 6 meeting, when it raised its interest rate by 50 basis points.

Analysts at Nomura are expecting the central bank to raise rates by 40 basis points, "to convey the view of RBA nearing the end of upsized hikes."

Economists at Commonwealth Bank Australia see a higher chance for a 25-basis-point hike than a 50-basis-point hike.

–Jihye Lee

CNBC Pro: Here’s what's next for stocks, according to Wall Street pros

September is finally behind us, much to the relief of many equity investors who endured a difficult month, with all major U.S. indexes posted steep losses.

With a historically weak month now firmly in the rearview mirror, what is the outlook for stocks as we enter into the fourth quarter of the year?

CNBC Pro combed through the research to find out what Wall Street thinks.

Pro subscribers can read more here.

— Zavier Ong