Higher inventories; RBA Rate Decision Upcoming

The Reserve Bank of Australia building in Sydney, Australia, Monday, September 6, 2021.

David Gray | Bloomberg | Getty Images

Asia-Pacific stocks traded higher on Tuesday ahead of the Reserve Bank of Australia’s rate decision.

The Japanese Nikkei 225 rebounded from earlier losses to rise 0.46% and the Topix index gained 0.28%.

Hong Kong’s Hang Seng Index rose 0.56% in early trading, while mainland China’s Shanghai Composite gained 0.4%. The Shenzhen component was slightly higher.

The Kospi in South Korea rose 0.3% and the Kosdaq gained 0.92%.

In Australia, the S&P/ASX 200 rose 0.14%.

The Reserve Bank of Australia is expected to raise interest rates by half a point to 2.35%, according to a Reuters poll. The Australian dollar was slightly stronger at $0.6828 in morning trading.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.44%.

On Monday, the People’s Bank of China announced that it would reduce the required foreign exchange reserve ratio, or the amount of foreign exchange reserves that financial institutions must hold, to improve financial institutions’ ability to use foreign currency funds.

From September 15, the RRR will be 6%, compared to 8% previously.

“This reduction should help increase FX liquidity and therefore reduce CNY depreciation pressure. Although the actual impact on FX liquidity is small…this reduction serves as a strong policy signal that the PBOC is not is not comfortable with the rapid depreciation of the currency,” Goldman Sachs Economics Research analysts wrote in a note late Monday.

US markets were closed overnight for a holiday.

In oil markets, US crude extended its gains from the previous session, while Brent crude edged lower.

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