By Xie Yu<\/p>\n\n\n\n
HONG KONG (Reuters) – Asian stocks rose on Tuesday afternoon after Australia’s central bank held interest rates steady, which helped ease investor worries about over-tightening of policies by central banks.<\/p>\n\n\n\n
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up by 0.3% by Tuesday early afternoon, reversing mild losses in the morning.<\/p>\n\n\n\n
Australian shares added 0.5%. The Reserve Bank of Australia (RBA) kept its cash rate at 4.10%, saying it wanted more time to assess the impact of past hikes.<\/p>\n\n\n\n
Signs of constrained global demand amid rate hikes is making central banks nervous, said Gary Ng, senior economist for Asia-Pacific thematic research at Natixis.<\/p>\n\n\n\n
“Central banks, especially those in the Asia Pacific region, have no choice but to rebalance their hawkish stance,” he said.<\/p>\n\n\n\n
That less hawkish stance, together with signs that China is pushing to support yuan, is propping up the market, he said.<\/p>\n\n\n\n
Matt Simpson, senior market analyst at City Index, said the pause in rate hikes by the Australian central bank “came as a relief to equity bulls”.<\/p>\n\n\n\n
“The ASX looks determined to tap 7300 this week. But it may need to look for global sentiment to pick up to hold on to recent gains,” he added.<\/p>\n\n\n\n
Japan’s Nikkei\u00a0share average fell 0.9% as investors exited some bullish positions after the benchmark index closed at a 33-year high in the previous session.<\/p>\n\n\n\n
China’s mainland benchmark was flat and Hong Kong’s\u00a0Hang Seng Index\u00a0added 0.6%, led by tech companies.<\/p>\n\n\n\n
U.S.\u00a0S&P 500\u00a0E-mini stock futures were flat in Asian trade. Wall Street stock indexes ended Monday’s shortened session up slightly along with Treasury yields.<\/p>\n\n\n\n
Most of Wall Street was closed for the U.S. Independence Day public holiday on Tuesday.<\/p>\n\n\n\n
In early European trades, the pan-region\u00a0Euro Stoxx 50 futures\u00a0and German\u00a0DAX futures\u00a0both edged up by around 0.2%, while\u00a0FTSE\u00a0futures were almost flat.<\/p>\n\n\n\n
Investors are now watching out for a mixed bag of economic data ahead of second-quarter earnings for more trading cues, while uncertainty remains over the U.S. Federal Reserve’s policy path, said Manishi Raychaudhuri, head of Asia Pacific equity research at BNP Paribas (OTC:BNPQY).<\/p>\n\n\n\n
The minutes from the Fed’s last meeting are due later this week, which could provide additional clues on policy direction but also inject some volatility, he said.<\/p>\n\n\n\n
“If the Fed overtightens and decides to do more rate hikes than twice as the market widely expected, then there’s a concern that the recession may turn out to be deeper than what is being factored in,” Raychaudhuri said.<\/p>\n\n\n\n
Geopolitical tensions also persist, he noted, with China’s export controls on minerals adding more uncertainty around global trade relations.<\/p>\n\n\n\n
In the currency market, the\u00a0dollar index, which tracks the greenback against six major peers, rose slightly to 102.97.<\/p>\n\n\n\n
Oil prices held steady on Tuesday, after settling 1% lower on Monday, as markets weighed supply woes from cuts for August by top exporters Saudi Arabia and Russia against economic data that suggested demand was weak.<\/p>\n\n\n\n
Brent crude\u00a0was up 0.6% at $75.07 a barrel. U.S. West Texas Intermediate crude also added 0.6% to $70.2.<\/p>\n\n\n\n
The Treasury market is shut Tuesday for Independence Day. On Monday, a widely watched section of the U.S. Treasury yield curve hit its deepest inversion since the high inflation era of Fed Chairman Paul Volcker, reflecting financial markets’ concerns that an extended Fed hiking cycle will tip the U.S. into recession.<\/p>\n\n\n\n
Gold was slightly higher, with\u00a0spot gold\u00a0traded at $1924.09 per ounce.<\/p>\n\n\n\n
(additional reporting by Ankur Banerjee in Singapore, Editing by Sam Holmes and Himani Sarkar)<\/p>\n