Governor Glenn Stevens cut the Australian overnight cash-rate target by a quarter percentage point to 2.5 per cent, a record low, and said the Reserve Bank of Australia’s board “has previously noted that the inflation outlook could provide some scope to ease policy further.”

Asian shares outside of Japan hit a two-week low and headed for their first loss in four days, as disappointing first-half earnings from HSBC dragged Hong Kong’s Hang Seng Index sharply lower. In Australia,

Asian shares measured by MSCI Asia-Pacific ex-Japan fell 0.8 per cent, to head for their biggest one-day fall in four weeks.

Hong Kong’s Hang Seng underperformed the region, trading down 1.7 per cent on the back of a 4.6 per cent fall in index heavyweight HSBC after the bank posted lower than expected earnings.

In Tokyo, the Nikkei share average shed 1.4 per cent on the back of the firmer yen, which lowers income for exporters such as carmakers.

“We blame the yen’s rise... we had some blue-chip companies like Toyota Motor reporting stellar earnings, but as the yen has strengthened those companies have failed to lift the market and we missed a rally,” said Yoshiyuki Kondo, a strategist at Daiwa Securities.

In commodity markets, copper eased 0.3 per cent to around $6,950 a tonne, extending a 0.4 per cent decline on Monday, while gold fell 0.7 per cent after a 0.6 per cent drop in the previous session.

Brent crude prices dipped 0.2 per cent at $108.50 a barrel, extending a 0.3 per cent fall on Monday and heading for a third straight day of loss - which would be its longest losing run since late May.

The US dollar slipped 0.3 per cent to 97.950 yen after the previous session’s 0.7 per cent decline, its biggest one-day fall in a week. It was not far from a five-week low of 97.585 yen touched on July 31st.

Reuters