Asian stocks fell on Tuesday as the post-Federal Reserve rally cooled, with investors cautious about the outlook for China-U.S. trade talks and the Reserve Bank of Australia’s upcoming policy decision.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.5%, after rising 2% in the previous session. Japan’s Nikkei stock index fell 0.6%, while South Korea’s KOSPI index lost 0.8%.
China trade in focus
Investors were keeping a close eye on China-U.S. trade talks, which are scheduled to resume on Thursday in Shanghai. The talks are seen as crucial to avoiding a further escalation of the trade war between the two countries.
“The market is still worried about the trade talks,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “If the talks fail, it will be a big negative for the market.”
RBA policy decision
The Reserve Bank of Australia (RBA) is also due to hold a policy meeting on Tuesday, with investors expecting the central bank to keep interest rates on hold.
“The RBA is expected to stay on hold, but they may sound more dovish given the recent weakness in the data,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific.
Other market moves
In other market moves, the Australian dollar fell 0.2% against the US dollar, while the Chinese yuan was little changed.
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