Australia and Japan edged higher; RBA leaves cash rate unchanged

Stock indexes in Australia and Japan were higher on Tuesday, while most markets in the region remained closed for the day in observance of national holidays.

Sydney’s ASX 200 added 0.54 percent in the day to end at 6,015.20 points, with financial components leading other subindexes to the upside.

The four biggest banks in the country were able to secure substantial gains in the session: ANZ grew more than two percent, followed by the National Australia Bank with a 1.97 percent gain. Commonwealth Bank and Westpac rose 1.67 and 1.43 percent, respectively.

An ANZ Bank’s statement said cash profit from continuing operations increased 4 percent to A$3.49 billion in the six months leading to March 31, from a prior year reading of A$3.36 billion.

Despite these results, top executives in Australia’s banking sector believe the “golden period” is coming to an end soon. In fact, ANZ has already began to sell its retail business in the region.

“Our sector has had a golden period for 20-plus years and we don’t think that’s going to continue,” ANZ CEO Shayne Elliott said Tuesday, adding that “in a tough world, only the fit will really survive and prosper.”

In other news, the Reserve Bank of Australia decided to keep its cash rate steady at 1.5 percent. The decision was widely anticipated by market participants.

Governor Philip Lowe said the Australian economy is expected to expand more than 3 percent in 2018 and 2019, while inflation is seen ending above 2 percent for this year.

"Business conditions are positive and non-mining business investment is increasing," Lowe said in its policy statement. "Higher levels of public infrastructure investment are also supporting the economy. Stronger growth in exports is expected."

Meanwhile, in Japan, the Nikkei 225 index closed 0.18 percent higher at 22,508.50 points, with a softer yen offering support to Nippon exporters.

Investors continued to monitor geopolitical developments. Israeli Prime Minister Benjamin Netanyahu claimed evidence was obtained proving that Iran ran a secret program to build nuclear weapons despite the multilateral agreement signed in 2015.

This allegations came only two weeks before President Donald Trump must decide whether to re-establish sanctions against Iran due to unfulfilled nuclear deal conditions.

Ahead in today’s session, the UK manufacturing PMI for April is scheduled for publishing as of 08:30 GMT, with a 54.8 points read eyed.

In the US, Markit Economics will present April manufacturing activity index at 13:45 GMT. The Institute for Supply Management will release its own manufacturing PMI fifteen minutes later. The American Petroleum Institute is expected to release its weekly report on crude and refined products stockpiles by 20:30 GMT.

FortFS