Asian equities decline as China lowers rates and Powell's hearing approaches.

Tuesday saw a continuation of Monday's losses for the majority of Asian markets as worries over China's weakening economy more than outweighed the central bank's reduction in interest rates.

As was largely anticipated by the markets, the People's Bank of China reduced its benchmark lending prime rate by 10 basis points across the board. Although the action is anticipated to increase the country's stimulus, it also draws attention to China's sluggish economic recovery.

Given that the PBOC previously reduced short- and medium-term rates last week, the reduction was substantially priced in by the markets. Prior to the LPR decrease, Chinese equities had climbed, recovering during the previous week from six-month lows.

However, the economic picture for China remains gloomy as a number of significant investment banks reduced their growth projections for the year. A number of poor economic reports for April and May contributed to the recent rate decreases.

Markets are also cautious ahead of Federal Reserve Chair Jerome Powell's testimony, which is scheduled to take place on Wednesday and provide more clues about interest rate rises and the economy.

While the Fed stopped its cycle of rate increases, it also signalled a possible higher terminal rate this year, meaning that U.S. rates may climb at least a further two times.

Given that high-risk assets become less appealing as interest rates rise, such a situation is bad news for the markets.

(Sources: investing.com, reuters.com)