Sydney Outperforms Asia After RBA - Wall Street Journal- India

Australia outperformed Asian stock markets Tuesday, with major resource shares and banks gaining in Sydney after the Reserve Bank of Australia kept rates steady, while Japan was supported by a weaker yen.

The Australian dollar fell sharply to US$0.9162 from US$0.9224 after the Reserve Bank of Australia kept rates unchanged at 2.75%. Expectations for a rate cut this month were low, though the market is expecting another cut before the end of the year.

The Reserve Bank of Australia said that the local currency remains high despite its recent depreciation, having dropped around 10% against its U.S. counterpart since the beginning of May.

Australia's S&P/ASX 200 was up 2.0%, bouncing back from a sharp 1.9% decline on Monday brought about by weak manufacturing data from China. Miners led the recovery after commodity prices rose overnight: BHP Billiton and Rio Tinto were up 2.4% and 2.1% respectively.

Banks also staged a decent rebound after Monday's selloff, with Australia & New Zealand Banking Group up 1.3% and Commonwealth Bank of Australia 1.2% higher.

Markets in Hong Kong missed the manufacturing data, which hit a nine-month low, due to a public holiday on Monday. As a result, the Hang Seng Index underperformed other regional markets—falling 0.4%.

PetroChina Co. shot 5.6% higher in Hong Kong after China's top planner announced an increase on gas prices that will come into effect on July 10.

Also weighing on Hong Kong, was another decline on the Shanghai Composite, down 0.4%. Sentiment in China remains fragile after a recent liquidity squeeze in mainland China rocked local markets.

There was a positive lead from the U.S., where Wall Street finished higher after the Institute for Supply Management's purchasing managers index for June rose slightly more than expected. The result was the latest piece of data pointing to strength in the world's largest economy, and comes before the much-watched monthly labor report due at the end of this week.

The U.S. data gave the dollar a push higher against the yen, with the pair reaching ¥99.81 overnight, though by Tuesday morning it had retreated slightly to Y99.61, maintaining most of its 0.6% overnight gain. In recent sessions, the dollar has crept closer to the ¥100 mark, a much-watched level that was crossed in early May, leading to a fresh round of buying in Japanese stocks.

Japanese shares moved higher, helped by the weaker yen. The Nikkei was up 1% at 13,992.74 after breaking above the 14,000 level earlier in Asian trade.

Exporters in Tokyo were buoyed by the softer currency: Toyota Motor Corp. added 1.7% and Mazda Motor Corp. was up 2.4%.

Elsewhere in the region, South Korea's Kospi was down 0.1% and Singapore's Straits Times Index rose 0.9%.

Write to Daniel Inman at daniel.inman@wsj.com