Asia-Pacific markets were largely subdued on Tuesday due to public holidays across key regional bourses, while the Australian sharemarket moved lower as investors monitored escalating tensions in the Middle East and awaited a crucial central bank decision.
By 11:15 am AEST (1:15 am GMT), the S&P/ASX 200 had declined 0.7%. Major regional indices, including Japan’s Nikkei 225 and South Korea’s KOSPI 200, remained closed for public holidays, contributing to thinner trading volumes across the region.
In Australia, economic data showed a sharp pickup in household spending, which rose 1.6% in March compared with 0.3% in the previous month, according to the Australian Bureau of Statistics (ABS).
Tom Lay, head of business statistics at the Australian Bureau of Statistics, said: “Household spending rose strongly in March, driven by a 5.1% rise in transport costs as fuel prices climbed in response to the conflict in the Middle East.”
Fuel prices surged during the first week of March and peaked toward the end of the month, prompting motorists to make smaller and more frequent trips to petrol stations.
Increased use of public transport also contributed to the rise in spending, suggesting some households are adjusting their behaviour in response to elevated fuel costs.
Food expenditure also strengthened, rising 1.7%, reflecting both higher prices and precautionary stockpiling by households concerned about potential disruptions to global supply chains.
Investor focus is now firmly on the Reserve Bank of Australia’s monetary policy decision, due at 2:30 pm AEST (4:30 am GMT).
According to the ASX's RBA Rate Tracker, as at 1 May, the ASX 30 Day Interbank Cash Rate Futures May 2026 contract was trading at 95.745, implying a 74% probability of a rate increase to 4.35% at the upcoming meeting.
ANZ analysts said in a note: "We expect the RBA to raise interest rates by 25bp. For most of the Board, the combination of (what the RBA considers to be) a tight labour market, year-on-year trimmed mean inflation of 3.5% in Q1 2026 and risks to inflation expectations will support taking the cash rate to 4.35%.
"The decision will however be close, and we expect several members to vote in favour of keeping rates on hold. "
Overnight in the United States, equities closed lower, with the Dow Jones Industrial Average falling 1.1%, the S&P 500 declining 0.4% and the Nasdaq Composite easing 0.2%.
Commodity markets reflected the heightened uncertainty, with ICE Brent crude surging 5.8% to settle at US$114.44 per barrel, marking its highest closing level since 28 June 2022.
In contrast, spot gold fell 2% to US$4,521.82 per ounce, hovering near monthly lows.
Elsewhere in the region, mainland Chinese markets remained closed for a public holiday, with both the Shanghai Composite Index and CSI 300 inactive.
Hong Kong’s Hang Seng Index rose 1.2% to 26,095.9, while India’s BSE Sensex gained 0.5% to close at 77,269.4.
European markets also closed lower. The UK’s FTSE 100 remained closed, while Germany’s DAX fell 1.2% to 23,991.3 and France’s CAC 40 declined 1.7% to 7,976.1.
