Asia shares push higher; RBA stands pat on rates

SINGAPORE: Asian stocks tracked Wall Street higher on Tuesday ahead of a chorus of Federal Reserve officials due to speak later in the day, while the Australian dollar held steady after its central bank offered few surprises in its policy decision.

The Reserve Bank of Australia (RBA) kept rates at a 12-year high of 4.35% on Tuesday, as expected, but warned there were still reasons to be vigilant against inflation risks.

Traders pared back on bets of a rate cut this year in the wake of the RBA decision, though the Aussie dollar was little changed as the statement contained few surprises. It last bought $0.6612.

"The outcome of today's RBA Board meeting was neutral in line with expectations," said Tony Sycamore, a market analyst at IG.

"The RBA will remain on hold until it gets a clearer reading that inflation is on track to return to target, or the economy has hit a pothole - whichever comes first."

Ebbing worries over political turmoil in Europe added to the buoyant market mood on Tuesday and sent EUROSTOXX 50 futures 0.35% higher, reversing some of its steep losses from last week. FTSE futures similarly rose 0.25%.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.64%, helped by an overnight rally on Wall Street.

"Optimism over a resilient economy, improving corporate earnings and the potential start of rate cuts has supported equities, defying concerns that the rally has been concentrated in just a few mega-cap tech stocks," said Jameson Coombs, an economist at Westpac.

Nasdaq futures were last 0.07% lower, while S&P 500 futures eased 0.02%.

Japan's Nikkei advanced 0.76%, alongside Chinese blue-chips which ticked up 0.15%.

Central banks in Norway, the UK and Switzerland are also due to meet this week, where bets are for the former two to hold steady on rates and for the Swiss National Bank to deliver another 25 basis points (bps) of easing.

Over in the United States, no fewer than six Fed speakers are on the docket on Tuesday, and they could provide further clues on the U.S. interest rate outlook following last week's policy decision.

Futures now point to roughly 45 bps worth of Fed cuts priced in for the rest of 2024.

In currencies, the dollar edged higher ahead of data on U.S. retail sales due later in the day, pushing the euro 0.13% lower to $1.0720.

Sterling similarly fell 0.07% to $1.2696, while the yen last stood at 157.73 per dollar.

China's onshore yuan languished near a seven-month trough at 7.2556 per dollar, weighed down in part by mixed economic data on Monday that pointed to further support needed from Beijing to shore up the country's economy.

"China's May economic data suggest that policymakers have a lot to do to sustain the fragile recovery," said analysts at Societe Generale. "The supply side and external demand remained more robust than domestic demand, despite the moderation in industrial production growth."

Elsewhere, oil prices eased, with Brent crude futures down 0.17% at $84.11 per barrel, while U.S. West Texas Intermediate crude futures slipped 0.17% to $80.19 a barrel.

Spot gold gained 0.08% to $2,320.69 an ounce. - Reuters

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