RBA Raises Cash Rate to 18-Year High as Asian Markets Slip Before US Midterms

Asian equity markets retreated broadly on Tuesday as investors grew cautious ahead of the US midterm elections, with technology stocks weighing heavily on South Korean and Taiwanese shares. South Korea's market tumbled amid weakness in semiconductor stocks, driven by concerns over returns on large AI spending and mixed earnings with cautious forecasts from major chip companies. Taiwan's benchmark fell more than 2%, compounding the regional selloff.

The Reserve Bank of Australia raised its benchmark cash rate by 25 basis points to 4.85% on Tuesday, the highest level since November 2008, after materially revising up its inflation forecasts. The decision was a split vote, with six board members backing the increase and three opting for a hold. Australia's S&P/ASX 200 trimmed early gains following the decision but remained above the 8,850 level in mid-session trade.

Oil prices stabilised after a sharp fall in the prior session, with renewed hopes for US-Iran diplomacy easing some geopolitical risk premium on crude supply. In agricultural markets, wheat traded in a mixed fashion at midday, with Chicago SRW front-month contracts edging up about 2 cents, Kansas City HRW futures fractionally lower in nearby contracts, and Minneapolis spring wheat little changed on either side of unchanged.