Asia markets were mixed Tuesday morning, with eyes on China after the central bank's surprise reserve requirement ratio (RRR) cut to free up liquidity.
In Singapore, share prices opened marginally lower by 0.03 per cent, with the Straits Times Index down 0.84 points to 2,665.67, The Business Times reported.
Japan's benchmark Nikkei 225 shed 0.47 per cent. The South Korean market is closed for a public holiday.
Australia's S&P/ASX 200 see-sawed between positive and negative before climbing 0.50 per cent in morning trade, with most sectors gaining. The heavily weighted financials sector was up 1.36 per cent, while the energy sector gained 2.39 per cent.
Miners mostly rebounded, with Rio Tinto gaining 3.57 per cent, Fortescue up 4.66 per cent and BHP Billiton adding 2.7 per cent. Gold miner Newcrest was up 4.74 per cent, with spot gold trading up 0.18 per cent at $1,240.40 an ounce.
Before market open, Japan released a slew of economic data that gave mixed signals. Household spending for January was down 3.1 per cent on-year in price-adjusted real terms. The drop was steeper than the forecast for a 2.7 per cent decline from a Reuters poll of economists. On the other hand, the seasonally adjusted unemployment rate in January dropped to 3.2 per cent, better than the market expectation for 3.3 per cent.
The yen maintained its strength against the dollar, remaining in the 112 handle. The pair traded down 0.13 per cent at 112.51 as of 8.05 a.m. HK/SIN time. Exporters were mixed, with Honda up 1 per cent and Sony down 1.65 per cent. Usually a stronger yen is a negative for exporters as it reduces overseas profits when converted into local currency.
Analysts said China would be in focus for investors and traders today after the People's Bank of China (PBOC) further cut the RRR Monday evening local time.
"China is the lead for Asia," wrote Chris Weston, chief market strategist at IG, in a morning note. "Judging by the initial 2 [per cent] spike in the China A50 futures (the largest 50 mainland companies, traded on the Singapore futures exchange) we should see some upside in the Chinese equity markets."
Weston added today's yuan mid-point fix by the PBOC could "be a major catalyst today," warning another weakening of the currency could cause a sell-off.
The RRR sets out how much of depositors' capital banks must hold as cash, so cutting the rate allows more money to flow into the financial system. Reuters reported that the 0.5 percentage point cut implied most large Chinese banks would have a reserve ratio of 17 per cent.
Iris Pang, a senior economist for Greater China at Natixis, said the unexpected move by the PBOC was designed to "increase the commercial banks' lending ability."
"This reflects the central bank is keen to ease liquidity in the China banking sector. The central bank may then need more window guidance to commercial banks to ensure these additional liquidity would not be directed to save zombie corporates in overcapacity industries," she said.
Worries about liquidity had caused Chinese markets to slump last week.
Pang expects high volatility in both the foreign exchange market and the equity market.
On Monday, the Shanghai composite closed down 2.87 per cent after falling over 4 per cent earlier in the session.
US crude made small gains during Asian hours, up 0.1 per cent at $33.78, after settling up 3 per cent overnight.
During US hours, global benchmark Brent crude's front-month April contract settled up 87 cents, or 2.5 per cent, at $35.97 a barrel before expiring and going off the board. May Brent settled up $1.13, or 3.2 per cent, at $36.57 a barrel.
Energy plays across Asia were mostly up, with Santos adding 2.72 per cent, Woodside Petroleum up 2.88 per cent and Japan Petroleum gaining 1.03 per cent.
Overnight, major US indexes closed lower, with the Dow Jones industrial average down 0.74 per cent. The S&P 500 was off 0.81 per cent, while the Nasdaq composite fell 0.71 per cent.
Several key economic data are due in Asia today, including the February manufacturing and services PMI numbers from China. The Reserve Bank of Australia will also announce its interest rate decision.
- Phillip Tutt and Reuters contributed to this report.