Equities in Asia closed lower on Tuesday. The decline in Asian shares comes at a time when the Reserve Bank of Australia has moved to cut interest rates to a record low.
Though lower interest rates are expected to boost economic growth in post-Brexit, the measures also signal to investors that they could be in for a prolonged period of economic uncertainty. Australia has cut its lending rates to a historic low of 1.5%.
How Asia markets performed
Japan’s Nikkei 225 (INDEXNIKKEI:NI225) fell 1.47%, weighed down by losses in the country’s Banking, Shipping and Mining sectors.
A stronger yen also seemed to have doused foreign interest in Tokyo shares. The USDJPY fell 0.14% to $102.28. However, the EURJPY pair edged up 0.04%.
In Taiwan, stocks closed lower with the Taiwan Weighted pulling back 0.13%. Oil, Gas & Electricity and Computers & Peripherals sectors led Taiwan stocks lower. In South Korea, the KOSPI retreated 0.52%.
China bucks broader Asian trend
Stocks in China closed higher on Tuesday, bucking the broader Asian equity trend. Bullish real estate data and foreign interest in Chinese small-cap stocks are cited as reason behind stock gains in the country.
The larger Shanghai Composite rose 0.6% and the smaller HANG SENG INDEX (INDEXHANGSENG:HSI) in Hong Kong rallied up 1.1%.
What about Australia?
Shares in Australia also pulled back with Gold, Energy and Resources sectors leading the decline. At the end of the day, the S&P/ASX 200 retreated 0.72%.
A stronger Aussie didn’t help matters as it doused foreign interest in Australian stocks. The AUDUSD rose 0.12.
Asian stocks have seemed to be volatile in the recent times since the U.S. Federal Reserve delayed raising interest rates and the Bank of Japan only announced modest stimulus measures. The European Central Bank and the Bank of England also failed to announce fresh easing measures, creating fear among some investors that delaying stimulus packages could worsen deflation in the region and the world.
The decision by Australia’s central bank to cut interest rates to all-time low signal growing concern among regulators of the threat of global economic recession.