Asian stocks mixed as Korea gains, China slips; RBA decision in focus

Asian markets were uneven on Tuesday, with South Korea leading gains while Chinese shares trailed as investors considered lingering inflation risks, higher oil prices, and uncertainty over U.S. interest rates. The MSCI AC Asia Pacific index stayed flat after fluctuating, while Nasdaq 100 Futures increased 0.3% and S&P 500 Futures climbed 0.1%.

This came amid heightened uncertainty over the Strait of Hormuz. U.S. President Donald Trump objected to Iran’s claims for compensation in a possible peace deal, reducing hopes of a swift resolution that would enable the waterway to fully reopen. Focus is also shifting to Wednesday’s U.S. CPI report. Headline inflation is projected to increase 0.1% in July from June's 0.4% decline.

A higher reading might reignite worries that the Federal Reserve may need to maintain higher rates for an extended period. South Korea's KOSPI climbed 0.8% to near 6,348, continuing its rebound after a weaker-than-expected U.S. jobs report on Friday eased concerns about an imminent Fed rate hike. Japan's markets were on a holiday.

The index experienced a boost from a resurgence in semiconductor stocks, with investor sentiment towards the tech sector remaining relatively strong. This follows a sharp shift last week, when investors reassessed inflated valuations in AI-linked chipmakers. The broader regional tech theme remains supported by fresh evidence of robust AI demand.

TSMC reported a 45% surge in July sales, with shares gaining 0.4%; Nvidia also announced a pact with six major financial institutions to launch compute-financing platforms intended to attract over $500 billion in third-party capital for AI infrastructure. Chinese stocks were comparatively sluggish, with the Shanghai Shenzhen CSI 300 up only 0.1% and the Shanghai Composite falling 0.2%.

The Hang Seng in Hong Kong slipped 0.6%. Indonesia's political landscape was also noteworthy after President Prabowo Subianto nominated Destry Damayanti as the sole candidate for Bank Indonesia governor. Citi analysts anticipate parliament to approve Destry, possibly before or after the August 19 policy meeting, potentially bringing policy consistency.

However, the Jakarta Stock Exchange Composite Index slipped 0.8%. Australia's S&P/ASX 200 edged up 0.3%, holding near the upper end of its recent range. The index had been confined between roughly 8,500 and 9,000 for 17 weeks before breaking higher last week. IG senior markets analyst Tony Sycamore noted that 9,000 has become a pivotal support level and that the ASX 200 could continue to rise toward 9,350 if it stays above that level.

However, Sycamore cautioned that the surging earnings season may bring more disappointments than positive surprises, perhaps causing a retest of the 9,000 support level in the coming weeks. Investors are also eagerly awaiting the Reserve Bank of Australia's policy decision later Tuesday. The RBA is expected to keep the cash rate at 4.35%.

ANZ analysts believe the decision may be a unanimous hold, though the board might explicitly consider both a rate increase and a hold. They cite a higher-than-expected unemployment rate, lower-than-expected inflation compared to RBA's May forecasts, and softer activity data as reasons to keep rates unchanged. Singapore's FTSE Straits Times rose 0.9%, outperforming many regional markets. India's Nifty 50 Futures gained slightly 0.05%.