RBA Minutes Boost Australian Shares; COVID-19 Scare Drives South Korean Kospi Sharply Lower

The major Asia-Pacific stock indexes settled mixed on Tuesday with cautious buyers getting a lift from Wall Street’s tech-driven rally on Monday, while sellers were encouraged by fresh concerns over U.S.-China tensions.

Sentiment was supported by the NASDAQ, which surged to a record high close on Monday and the S&P 500, which approached its own record level, both lifted by technology stocks.

Meanwhile, investors remained nervous about lofty valuations after the Trump administration announced on Monday it would further tighten restrictions on China’s Huawei Technologies Co., aimed at cracking down on its access to commercially available chips, a move set to disrupt global supply chains.

In the cash market on Tuesday, Japan’s Nikkei 225 Index settled at 23051.08, down 45.67 or -0.20%. Hong Kong’s Hang Seng Index finished at 25273.64, down 73.70 or -0.29% and South Korea’s KOSPI closed at 2348.24, down 59.25 or -2.46%.

In China, the Shanghai Index settled at 3451.09, up 12.29 or +0.36% and Australia’s S&P/ASX 200 finished at 6123.40, up 47.00 or +0.77%.

Australian Shares End Higher as RBA Minutes, Lower Virus Cases Lift Sentiment

Australian shares closed higher on Tuesday, with healthcare stocks leading gains, as the central bank’s minutes showed some optimism around its economy and the rapid spread of the novel coronavirus in the country appeared to ease, Reuters reported.

The Reserve Bank of Australia does not see a need to further ease policy for now as its measures were working “broadly as expected” with a recovery underway in most of the country, its August policy meeting’s minutes showed.

Aiding sentiment, lower COVID-19 cases were reported in Victoria and New South Wales and Australia is now set to mark its lowest one-day rise in infections in a month.

China Healthcare, Consumer Shares Fuel Strong Rally

Shanghai stocks ended higher on Tuesday, extending a previous session’s rally, helped by strong gains in healthcare and consumer stocks. The modest gains came after Monday’s strong rally, as investors turned to financial and other traditional players with low valuations on more signs of economic recovery.

“The benchmark Shanghai Index could break through its resistance area given the active trading, and as investors seek opportunities in banking, real estate and construction stocks with low valuations for the short-term,” Yin Yue, analyst with Yuekai Securities said in a report.

South Korea Stocks Drop Most in 2 Months as Domestic Virus Cases Surge

South Korean shares fell the most in two months on Tuesday as worries about a surge in domestic coronavirus cases eclipsed optimism from an overnight tech-fueled rally on Wall Street.

South Korea reported a three-digit increase in novel coronavirus cases for a fifth consecutive day, as authorities scrambled to trace hundreds of members of a church congregation, and the military locked down bases to counter the spread of the virus.

“The spike of COVID-19 cases during the holiday weekend dented the sentiment … there are worries that the virus spread could worsen and would delay the economic recovery,” said Lee Young-gon, an analyst at Hana Financial Investment.