Asian Stocks Mixed Following A Chinese Fuelled Rally

The Asian markets resulted in a mix on Tuesday after a Chinese rate cut had heated up a rally which followed a previous trading session. China's market rally was spurred after borrowing costs were cut for the first time in more than two years.

Hong Kong and Shanghai’s stocks both rose, with the TOPIX index closing at its highest since June 2008. Japanese markets were led today by tire makers and insurers amid an optimistic outlook in which global central banks will support future growth.

In Hong Kong, the Hang Seng Index was down at -2.70% and in Shanghai, the Shanghai Composite Stock Market Index down 28.36% from its August 2009 peak.

The Dow 30 rose 0.04%, the S&P 500 index rose 0.03% yesterday, while the NASDAQ Composite index rose 0.89%.

Monday's surge impacted the foreign exchange markets as the yen picked up following BoJ governor Haruhiko Kuroda's statement that policymakers were aware of the impact of its sharp decline on the world's number-three economy. Yuan weakness has reached multi-year lows against the dollar and euro ever since the stimulus programme by the central bank took in effect October 31.

Chinese leadership has been targeting an economic growth of 7.5% this year. China’s yuan fell as the rate cut was also seen as an indicator of weakness in the domestic economy. The yuan was at 6.14 against the U.S. dollar, against 6.12 late Friday in Asia.

Oil prices in Asia stumbled as expectations were lowered after the outcome cut at this week's Organization of the Petroleum Exporting Countries meeting. The OPEC will hosts its most challenging and significant meetings in recent years on Thursday to address current falling oil prices.

U.S. crude was down at $75.75 a barrel, while Brentl fell close to 0.3 percent to $79.42 a barrel. The dollar let go of early modest gains against the yen, down close to 0.3 percent to 117.91 yen. The dollar moved away from its seven-year high of 118.98 on Thursday.

Strategists at Barclays stated in a note that "The reduced leverage that OPEC now has over the oil market is likely to make it more cautious about cutting production."

"The rapid growth being achieved in non-OPEC production means it faces the risk that even a large cut to supply may not be enough to support prices and could simply result in lost market share and revenue," they said.

The Asian markets also impacted to Australia where the benchmark S&P/ASX 200 gained 1.1%. Australia’s mining companies, came out as a leader following gains which ended after a two-week losing streak for the benchmark.

Rio Tinto (NYSE:RIO) gained 3.4%, BHP Billiton Ltd (NYSE:BHP) was up 3.8% and Fortescue Metals Group Ltd (ASX:FMG) surged 10.1%, as investors anticipate more demand in commodities such as steel and iron following the Chinese monetary policy. China is Australia’s largest trading partner within these areas.

Gold markets were held steady below $1,202.80 an ounce on Tuesday. The markets retained its losses from the previous session. Investors have been monitoring the current developments in Switzerland’s upcoming referendum on November 3, 2014 which will address a proposal of the central bank and its gold reserves. The vote is aimed to prevent the SNB from offloading its gold holdings.

Chinese Stocks, along with several other Asian stock indexes, have had outstanding performance globally throughout the year. The Shanghai Composite is up close to 20% in 2014. The Chinese central bank cut has left investors an optimistic outlook to buy.