Asia: Unchanged Aussie interest rate drives stocks up

Asian indices closed higher on Tuesday after Australia's central bank left its monetary policy unchanged amid speculation that the US Federal Reserve might wait longer to increase interest rates.

The Nikkei 225 was up 1.25% driven by an overnight Wall Street rally amid speculation the Fed could hold off further on an interest rate hike.

Japanese equities were also helped by a recovery in oil prices. The Shanghai composite index jumped 2.52% while Hong Kong's Hang Seng was closed for a holiday.

Chinese Premier Li Keqiang said over the weekend that the country's manufacturers should focus more on quality than quantity in equipment exports and invest more offshore.

Following the statement, China Netcom Technologies gained 42.9% and China Telecom rose 2.17%.

Elsewhere, a report published by Baring Asset Management said the Asian market presents "excellent opportunities" for investors thanks to a more balanced economic growth model for China and the resurgence of domestic consumer markets.

HyungJin Lee, head of Asian Equities at Barings said: “We believe that 2015 will be a pivotal year for the wider Asian economy, and that the region represents exceptional value for long-term investors.

"With the normalisation of growth in the US and other global economies, people are looking again at the long-term opportunities in Asia, especially markets in south east Asia as well as India and, of course, China. In terms of the latter, the rebalancing of China’s economy onto a more stable growth outlook is a positive for the region."

Analysts at Barclays warned, however, China's oil demand faces "significant headwinds", as they believe hopes that the second biggest economy in the world will provide strong support to the global oil market are "premature".

Australia's ASX gained 0.46% after the Reserve Bank of Australia (RBA) left the benchmark interest rate unchanged at 2.25%, despite local anticipation of a cut as the country attempts to boost its economy.

Analysts still expect the RBA to cut the rate further, quite possibly, at its next policy meeting on 4 May.

However, governor Glenn Stevens said: “We judged that it was appropriate to hold interest rates steady for the time being.

“Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. We will continue to assess the case for such action at forthcoming meetings."

In economic news, Aussie services index declined to 50.2 points in March from 51.7 the month before.

Mining company Rio Tinto was up 0.66% after completing a bigger-than-expected off-market share buyback due to strong demand. The company, as part off its planned US$2bn capital return announced in February, repurchased 11.6m shares at a price of 560m Australian dollars, higher than the A$500m initially indicated.